The 73-year-old musician's former bandmates - guitarist Andy Summers and drummer Stewart Copeland - claim they are owed "millions in lost royalties" relating to the band's music, including the hit song Every Breath You Take.
"This has been coming for quite some time. Lawyers tried repeatedly to reach an out-of-court settlement but hit a stalemate," a source told The Sun newspaper.
"Andy and Stewart decided there was no alternative than court so pressed the button. They say they are owed millions in lost royalties."
The pair presented Sting with a High Court writ and the case has been listed at London's High Court under "general commercial contracts and arrangements".
Sting appears as a defendant under his real name, Gordon Matthew Sumner, while his firm Magnetic Publishing Limited is also listed.
The band formed in 1977 and split in the mid-1980s.
They surprised fans by returning with a reunion tour between 2007 and 2008, where they played 151 dates worldwide.
Despite its success, Sting has admitted he regrets the reunion tour.
He previously told Reader's Digest: "At the time I labelled the tour an exercise in nostalgia. That was simply how I felt and is still how I feel today.
"I think it's OK to be honest about your feelings and that was the way it went for me."
"That's not a slight on the people I was with or the way things panned out, it's just how I saw it by the end, and let's be honest, that's not how I wanted to remember it.
"If I thought that would be the emotion I'd be leaving with, I wouldn't have done it in the first place."
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