Buddy Sheffield filed the lawsuit in Los Angeles Superior Court on Thursday alleging breach of contract, breach of confidence, unfair competition and unjust enrichment.
Disney officials could not be reached at the company's Burbank offices Thursday evening for comment.
Disney Channel officials at first liked the idea, but ultimately passed on it, the lawsuit alleges.
The Disney Channel's "Hannah Montana" is about high school student Miley Stewart — who lives a secret double life as a famous pop star.
"Hannah Montana," starring Miley Cyrus and her father, country singer Billy Ray Cyrus, has generated two hit music CDs and helped sell a great deal of merchandise. Sheffield says he deserves a share of the revenue.