Lawyers acting for James Murray and Ruth Gould lodged the suit with a New York court within the last week.
The couple allege a company that brought them to the US "under the promise of a glimpse of the American dream, instead delivered them into a nightmare".
Murray and Gould, who left Ireland for the US under the Walsh Visa programme, were jailed for a week earlier this year and threatened with deportation after their employer made a series of allegations against them. They were released without charge.
The Walsh Visa allows people from the North and border counties to legally work in the US for three years.
The couple, originally from Belfast and both in their early 30s, were living in Las Vegas and working for a man named Steve Smith who ran a hang-gliding company.
But the relationship between the couple and Smith became confrontational and came to a head in February.
"He complained that we were in contact with people in Yemen, that we were learning how to fly aircraft and were making anti-American statements and planning a terrorist attack," Mr Murray claims.
Following Smith's complaint to the parent company, Northrop which hired Murray and Gould the couple were arrested by the US Immigration and Naturalisation Service.
"Smith was trying to get us deported so that the situation we had gone through would not end up at his front door," Murray said.
In the end, it was Smith who ended up behind bars. He has a string of prior convictions and was arrested and was later convicted of abducting a prostitute and threatening to kill her.
The suit accuses Northrop of negligence, causing personal injuries and breach of contract. It claims, according to documents lodged by the couple, they were "arrested, jailed and traumatised after being subjected to wildly false suggestions made to the US government that, inter alia, they might be involved in hatching a Middle East-inspired terrorist plot against the US."
The suit states Smith's statements included "bizarre and unfounded suggestions" the plaintiffs had expressed desires to open a business in Yemen and expressed views opposing US policy and had never actually worked for Smith's company, Las Vegas Airsports.
It claims Northrop did not dismiss Smith's insinuations as malicious or launch an investigation. Northrop had "initiated a man-hunt and ultimately arranged for the arrest, detention and unlawful incarceration of Murray and Gould by the Immigration and Naturalisation Service", it claims.
The suit alleges that Northrop failed to honour its statutory obligation to investigate the bona fides of Smith or his "outlandish" allegations.
"When the insinuations of terrorist activity were quickly found to be entirely without merit, Northrop, rather than correcting the very serious and damaging assertions it made to the INS and the Department of State, instead continued to propound Smith's other false charges, resulting in the Plaintiffs' impending deportation.
"In so doing, Northrop, which had brought the plaintiffs to the US under the promise of a glimpse of the America dream, instead delivered them into a nightmare." The couple want compensation damages in excess of $1 million and punitive or exemplary damages in excess of $100 million.
Sources in the US-Irish community said the case was an extreme example of the increasingly stringent stance to immigrants taken by authorities in the last year since September 11.