Shurat HaDin filed a lawsuit in the D.C. District Court on behalf of 8,000 Israeli families whose loved ones were harmed by Hamas' attacks on Israel.
They accuse the US State Department of violating the law prohibiting support of terror.
The lawsuit is based on the US administration's funding of the UN Relief Agency for Palestinian Refugees.
In 2023 alone, the State Department transferred $422 million to UNRWA.
The assistance was suspended due to the agency's participation in the October 7 attack on Israel.
"UNRWA has become a tool of Hamas, employing terrorists and sympathizers seeking Israel's destruction and the murder of innocent Israelis. Some agency employees, paid by the United States and other Western countries, have been involved in murder and rape," the lawsuit states.
While UN officials, including Secretary-General António Guterres, have acknowledged that some agency staff participated in Hamas atrocities, they oppose undermining UNRWA's legitimacy."