The lawsuit — filed in federal court in San Jose — is disputing MLB's exemption from federal antitrust law, which MLB has used as a "guise" to control the location of teams, according to the suit.
"It's time for someone to take on this supposed baseball exemption from antitrust laws," said attorney Phil Gregory of Cotchett, Pitre & McCarthy, the law firm representing the city. "The City of San Jose is a perfect candidate to make that challenge."
The San Francisco Giants have objected to the A's potential move on grounds they relied on territorial rights to the San Jose-area market when they built their ballpark, AT&T Park.
The A's say those rights were only meant to support the Giants' failed efforts in the early 1990s to build a San Jose-area ballpark themselves.
The lawsuit contends that such territorial rights, regardless of the team, reduce competition and harm consumers.
Giants spokeswoman Staci Slaughter declined to comment.
MLB Commissioner Bud Selig appointed a committee more than four years ago to study the A's potential move.
He rejected a proposal earlier this year from San Jose Mayor Chuck Reed to sit down and talk about the A's plans and said Reed's reference to additional litigation at the time was "neither productive nor consistent with process that the Athletics have initiated under our rules."
Rob Manfred, an MLB executive vice-president, said in a statement Tuesday that "Major League Baseball has acted in the best interests of our fans, our communities and the league" when considering the issues related to the Athletics.
"The lawsuit is an unfounded attack on the fundamental structures of a professional sports league," Manfred said. "It is regrettable that the city has resorted to litigation that has no basis in law or in fact."
Wolff, the A's owner, released a brief statement. Gregory said he is not involved in the lawsuit.
"I have no details," Wolff said. "However, I am not in favour of legal action or legal threats to solve business issues."
Wolff has said he is focused on a new stadium in San Jose rather than a move outside the Bay area. Wolff is allowed to consider other sites within the A's territory — such as downtown Oakland — but approval from MLB would be needed for a move outside the territory.
Oakland Mayor Jean Quan said during a quick briefing Tuesday that she's confident that the A's will remain in Oakland.
"We're ready to negotiate any time the A's want to come to the table," Quan said. "I've been saying to Lew Wolff we're ready to go. So, let's play ball."
She said Oakland is focused on building a new stadium in town and has two sites under consideration, including one along the waterfront and another where the A's currently play.
The A's current ballpark is run down. A sewage problem forced the A's and Seattle Mariners to use the same locker room after Sunday's game.
The pipes backed up on the lower levels of the stadium, creating a stink of raw sewage and pools of water in the clubhouses used by both teams and the umpires.
Baseball's antitrust exemption was granted by the U.S. Supreme Court in 1922, with the court ruling that baseball is not interstate commerce.
The lawsuit contends that while baseball may have started as a local affair, it is "squarely in the realm of interstate commerce."
"MLB clubs ply their wares nationwide, games are broadcast throughout the country on satellite TV and radio, as well as cable channels and MLB clubs have fan bases that span from coast to coast," the lawsuit says.
The lawsuit alleges San Jose's failure to obtain the stadium would result in a loss of $1.8 billion in direct spending over 30 years. It calls on the court to find MLB in violation of antitrust laws and to prevent it from blocking the A's move. It also seeks damages.
Associated Press Writers Terry Collins in Oakland and Mihir Zaveri in San Francisco contributed to this report.