The lawsuit filed Sunday by the U.S. Department of Justice came roughly an hour after Gov. Jerry Brown signed the law.
The Federal Communications Commission last year repealed rules preventing internet companies from exercising more control over what people watch and see on the internet.
California's law seeks to reinstate those rules.
The lawsuit argues that California's approach is "unlawful and anti-consumer" because it imposes burdensome regulations on the Internet and goes against the federal government's approach.
U.S. Attorney General Jeff Sessions says he will defend the federal government's position.