The lawsuit accuses Taco Bell of circulating a print ad campaign that appeared in the style of a letter addressed to 50 Cent, encouraging him to change his name to "79 Cent", "89 Cent" or "99 Cent" for one day to match its menu prices and promised to donate $10,000 to the charity of his choice if he did.
The ad was allegedly part of the company's "Why pay more?" campaign, which promotes menu choices sold for less than a dollar.
However, the suit claims that 50 Cent was not paid for the ad and was only made aware of the campaign once it was reported in the news.
50 Cent, whose real name is Curtis Jackson, said in the suit that the campaign "diluted the value of his good name" by fooling consumers into thinking he had endorsed the chain.
The lawsuit said: "Without seeking or obtaining Jackson's authorisation, defendant Taco Bell made him the star and focus of its nationwide advertising campaign by using his name, persona and trademark to promote Taco Bell's business and products.
"As Taco Bell intended, many customers believed that 50 Cent had agreed to endorse Taco Bell's products. Indeed, postings on numerous Internet 'blogs' castigated 50 Cent for 'selling out' by his apparent endorsement of Taco Bell."
A spokesman for Taco Bell said that the company ran the campaign in good faith and always intended to donate the money to the charity of his choice.
Since releasing his debut album 'Get Rich or Die Tryin', 50 Cent has started his own record label, G-Unit Records, starred in his own biopic of the same name as his album, launched his own line of G-Unit branded clothing, as well as vitamin water and videogames, and featured in a campaign for Adidas.