The supermarket chain claims the newspaper published in a series of articles and a podcast untrue allegations that were denied before the story was published.
In a statement released on Friday, it said: "[The Guardian] wrongly alleged that Tesco had contrived a tax avoidance structure involving a series of joint venture partnerships held largely offshore to avoid paying up to £1bn of UK corporation tax on sales of its UK properties.
"The Guardian also wrongly accused Tesco of having already avoided corporation tax on what it said were £500m of profits from two property deals using that structure."
Tesco claims it told the newspaper five times before publication that the allegations that it had avoided paying corporation tax were untrue, and has accused the newspaper of not publishing its denials.
It calculates its tax savings from the scheme as £23m in stamp duty related taxes, in contrast to The Guardian's allegation of corporation tax avoidance of up to £1bn.
It has also been pointed out by Tesco that GNM's parent company Guardian Media Group is one of a number of companies using offshore companies for the purpose of joint ventures with third parties.
GMG and its partner Apax created a new company registered in the Cayman Islands as part of their acquisition of Emap, completed last month.
The Guardian has issued the following statement in response to Tesco's move.
"This looks like a deliberate tactic by Britain's largest retailer to shut down perfectly legitimate inquiries into their methods of tax avoidance. At the same time that two Tesco Directors are reported [in the Financial Times on March 4] to have lobbied the Government in private on matters of taxation, the company is now seeking to chill public debate on the same issues.
"The articles appeared in the context of a series of articles on taxation issues in a globalised world. They clearly raised serious matters of public interest in relation to tax avoidance and tax management. We have never claimed Tesco behaved illegally. These are matters of considerable political importance at present, debated by all parties.
"Guardian journalists put a series of questions to Tesco over a period of nearly four months. At no point during the pre-publication correspondence would Tesco even admit the off-shore structures, still less give the explanation they advanced post-publication. We offered meetings to discuss the allegations: the offer was rejected. We included Tesco's explanation in the articles, and have subsequently offered the company the opportunity of a full and prominent right of reply.
"Instead of frankly explaining their position or engaging in a public dialogue, Tesco have taken the extraordinary step of suing for libel in a clear attempt to close down the debate and discourage others from looking too closely. It is hard to think of another large public company which would resort to such bullying tactics."
For more on the dilemma the conflict poses GMG chief executive Carolyn McCall, who is a non-executive director of Tesco, read .
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