The National Council of Canadian Muslims is suing Canadian Prime Minister Stephen Harper for defamation, alleging his spokesman linked the group to terrorism in January.
The suit seeks a retraction and $100,000 in damages.
The row began when council leaders criticized Harper for including Rabbi Daniel Korobkin, who hosted anti-Muslim bloggers Pamela Geller and Robert Spencer, at an event last fall in Toronto.
The prime minister's communications director, Jason MacDonald, responded by saying, "We will not take seriously criticism from an organization with documented ties to a terrorist organization such as Hamas."
Hamas is listed as a terrorist organization in Canada.