Faruqi is seeking a sum of $150,000 from Hanson to be donated to a not-for-profit or community organisation chosen by her.
She also wants Hanson to undertake anti-racism training and pay legal costs.
In a statement, Faruqi said she had “taken on bullies” her whole life and had no choice but to take on the One Nation leader.
“I refuse to let Senator Hanson get away with racist bullying and harassment,” she said.
“Senator Hanson crossed a line when she tweeted those hateful comments and I am hoping the Federal Court puts an end to this pattern of bigotry.
“Not just for me, but for the almost 30 per cent of Australians born overseas, and their next generations.
“I shouldn’t have to take the personal risk and trauma of taking Senator Hanson to court.”
Read Related Also: Molly-Mae defended by fans after she’s mum-shamed for taking baby Bambi outside in the cold
Last year, the Greens attempted to censure Hanson in the upper house but the motion was amended by the government and opposition to instead condemn all forms of racism.
Hanson defended her comments and denied she is racist.
Faruqi said she chose to launch proceedings following Hanson’s refusal to apologise for her tweet, and her rebuff of conciliation attempts from the Australian Human Rights Commission.
“Senator Hanson has used her decades in the spotlight and immense public platform to spew vicious hate towards people of colour,” Senator Faruqi said.
“She has caused incalculable harm and gotten away with it for far too long.
“It’s time that she was held accountable.
“Senator Hanson has been contacted for comment on the court action.