Following a meeting with Attorney General Wayne Stenehjem, the Board of Higher Education voted 8-0 to authorize the lawsuit, which would be handled by Stenehjem.
The NCAA last year announced it was banning the use of ethically or racially "hostile" or "abusive" nicknames, mascots and imagery at championship events. It found 18 schools, including UND, to be in violation of the policy.
Several of those schools have since changed team names and mascots or won appeals after local tribes came to their defense. In UND's case, though, the NCAA rejected the appeal and told the school it may not use the Fighting Sioux nickname and Indian head logo during NCAA postseason tournaments, and it may not host a tournament if it continues to use them.
Stenehjem said the NCAA's decision was an edict delivered by a committee that used constantly changing standards and didn't put the plan to a vote of the NCAA's membership.
The NCAA's executive committee, "more or less by fiat, decided that some institutions were going to be subject to this rule, and some institutions, for reasons that are not understandable, were exempted," Stenehjem said.
He wouldn't say when the lawsuit, to be financed by private funds, would be filed.
NCAA President Miles Brand has said the NCAA will defend its policy "to the utmost."
North Dakota's Board of Higher Education reviewed the UND nickname and logo in 2000 and ordered the university to keep them shortly after a benefactor building a hockey arena on campus threatened to leave it unfinished if the name and logo changed.
A number of Indian tribes and students support dropping the nickname and logo. One official with the Standing Rock Sioux Tribe wrote a letter supporting the university, but another opposed the nickname.
David Gipp, president of Bismarck's United Tribes Technical College, asked the board to forgo legal action.
"We would hope that rather than spend funds on a lawsuit, the funds were instead used to create more opportunities for American Indians, and all North Dakotans, to improve their lives and to promote diversity," he wrote.