The case comes as boycotts against global brands by the BDS movement over ties to Israel increase as a response to it's war on Gaza.
McDonald's Malaysia has sued a pro-Palestinian group for $1.3 million over its calls to boycott companies allegedly supporting Israel.
In a statement issued Friday, the fast-food chain said the civil suit against BDS Malaysia was aimed at protecting "our rights and interests in accordance with the law".
McDonald's said it "does not support nor condone the current conflict in the Middle East".
"While we understand and respect that the act of boycotting is an individual decision, we believe that it should be based on facts and not false allegations," McDonald's said.
McDonald's has sought six million ringgit in damages for alleged defamation, according to a copy of the legal document seen by AFP.
In a post on the social media platform X on Friday, BDS Malaysia said "we categorically deny this" alleged defamation.
BDS Malaysia is part of the global Boycott, Divestment, Sanctions movement, which was launched by Palestinian civil society organisations in 2005.
The campaign advocates political and economic action against Israel over its treatment of Palestinians.
In response to Israel's brutal assault on Gaza, BDS Malaysia intensified calls for Malaysians to boycott Western brands, including McDonald's, KFC and Zara, that it alleges are "complicit with Israeli atrocities towards Palestinians".
Israel launched an offensive in Gaza after Hamas's 7 October attacks on Israel, which left about 1,139 people dead, according to an AFP tally based on Israeli figures. Around 250 hostages were also taken to Gaza.
Israel's relentless military campaign since then has killed at least 21,507 people, mostly women and children, according to Gaza's health ministry, with a further 55,915 people being wounded.
Israel's operations have also caused the displacement of around two million people in Gaza, with the enclave having a scarcity of food, fuel, and medical supplies due to a tight blockade imposed by Israel.
