The State Court lawsuit was filed Wednesday by a niece of Kathryn Johnston, accusing them of racketeering, civil rights violations, assault, false imprisonment and negligence.
The suit targets the city, Police Chief Richard Pennington and five current and former police officers. The family is seeking unspecified damages.
Hezekiah Sistrunk Jr., an attorney for the niece, Sarah Dozier, said they had attempted to talk to the city about a settlement.
"That has been unsuccessful. That is why we are here today," he said at a news conference.
Plainclothes narcotics officers burst into Johnston's home Nov. 21, 2006, using a no-knock warrant. Johnston was killed during the raid in a hail of nearly 40 police gunshots.
Prosecutors said the officers obtained the warrant by falsely telling a judge that an informant confirmed drug dealing at the home. The informant later told federal investigators he was told by police to concoct the tale.
Prosecutors also said that one of the police officers planted three bags of marijuana in Johnston's home as part of a cover-up after no drugs were found.
The suit accuses officers who raided the home of violating Johnston's constitutional protections against unreasonable searches and seizures and the use of unreasonable and excessive deadly force. It cites witness tampering in its racketeering accusation.
Prosecutors charged three officers involved in the raid. Two of the officers, Jason R. Smith and Gregg Junnier, pleaded guilty to state manslaughter and federal civil rights charges. They have left the police force. A judge Tuesday ordered the two to turn themselves in by Dec. 3. No sentencing date has been set.
A third officer, Arthur Tesler, who is on administrative leave, faces charges of violating the oath of a public officer, making false statements and false imprisonment under color of legal process. His attorney has said Tesler expects to go to trial.
All three are named as defendants in the lawsuit.
"I am thankful my aunt's innocence has been proven," Dozier said in a statement read to reporters. "I am deeply saddened that the city of Atlanta and its chief of police have refused to admit responsibility for unconstitutional policies, lack of supervision and inadequate training of police officers that ultimately killed her."
Dozier was not present at the news conference.
Beverly Isom, a spokeswoman for Mayor Shirley Franklin, declined to comment on the suit, referring calls to an attorney for the city. The attorney, Jerry De Loach, declined to comment, saying the city had yet to be served with the lawsuit and wanted to review it before responding.
Officer Ronald Campbell, a spokesman for Atlanta police, said, "We are unable to comment on anything because of the legalities of it."