City Attorney Mike Feuer announced the lawsuit against Polymer80. The company makes unfinished lower receivers or frames that can be bought as kits and assembled at home. The finished weapon will have no serial number and requires no background check to purchase and assemble.
The Los Angeles Police Department says it has recovered more than 700 ghost guns that use parts from Polymer80, about 300 of those in the South Los Angeles area. In Los Angeles, about 40% of the recovered guns have no serial numbers.
The city argues that the company is violating state and federal gun laws and is engaging in false advertising by telling customers the business model is legal.
"Untraceable ghost guns are now the emerging guns of choice across the nation," Feuer said.
ABC News contributed to this report.