The American Civil Liberties Union filed the lawsuit in Detroit federal court on behalf of the group's two members, Joseph Bruce, or Violent J, and Joseph Utsler, or Shaggy 2 Dope. It also names four fans as plaintiffs.
The FBI report on criminal gangs labeled the Juggalos as a "loosely organized hybrid gang." It said those who identify as Juggalos have committed assaults and vandalism, and a "small number" of them have engaged in more serious crimes.
The lawsuit contends that the gang designation violates the fans' free speech and due process rights.
At a news conference in Detroit, Bruce, 41, said Juggalos are like a family, not a gang. He said they have a constitutional right to listen to music without fear of harassment, and he wants Juggalos purged from the report.
"I don't think this has anything to do with hip hop. I think they just fear what they don't understand," Bruce said of law enforcement.
An email seeking comment from the FBI was not immediately returned.
Among the fans suing is Scott Gandy, of Concord, N.C. He said the Army told him that in order to join, he would first have to get his Insane Clown Posse tattoos removed because they were gang symbols. Gandy said he spent hundreds of dollars removing them, only to be rejected by the Army anyway.
Brandon Bradley, 20, of Sacramento, Calif., said he has been stopped by police and photographed because of his Juggalos tattoos and attire, including a necklace with a man carrying a hatchet. It is an Insane Clown Posse symbol.