There are several options, but no matter which one(s) you choose, `sort` needs some space to work.
The -T option allows you to specify somewhere else besides /tmp for `sort` to put its stuff.
The -S option may allow you to tell `sort` to use more memory instead of disk space, though it may already use as much as it can finagle.
The --compress-program option, tells `sort` to compress its temp files using whatever compressor you tell it to use.
Sounds like you want the -T option most of all. Check the man page for more info on these.