The Mean Girls star is seeking $100 million (£66.7 million) in damages and compensation in connection with the promo for financial firm E-Trade, which depicts a baby girl called Lindsay as a boyfriend stealer and a "milkaholic".
Lohan filed a lawsuit on Monday (08Mar10) at Nassau County Supreme Court over the advert, which debuted on U.S. TV during the Super Bowl last month (Feb10).
The star's lawyer, Stephanie Ovadia, alleges company bosses used Lohan's "name and characterisation" without paying her or asking for her approval, thus violating her rights, while chiefs at the advertising firm behind the commercial claim they chose the name Lindsay at random.
And now Dina Lohan has defended her daughter's decision to sue, insisting the advert reduced the actress to tears during the Super Bowl celebrations.
Dina claims the 23 year old called her after the Super Bowl "extremely upset", telling The New York Post, "She said, 'Mommy, help me. This is wrong. How can they do this?'"
Lohan's mother is adamant the commercial was aimed at her daughter - insisting the name Lindsay has as much recognition as other single-word monikers, used by stars such as Madonna and Cher.
She adds, "They're little babies doing this, mocking another child who's just trying to survive Hollywood, basically. I'm just basically glad I took a stand. I'm not going to let them do this to us anymore. Everyone knows Lindsay, like Cher or Madonna."
Lohan is seeking $50 million (£33 million) in exemplary damages, as well as $50 million (£33 million) in compensation.