Anna Dyer, 64, was overlooked for last year's local authority elections despite standing as a Labour candidate in the Holyrood election the year before.
She claims she has been discriminated against by the party and has suffered "loss, injury and damage, in particular to her feelings" due to the party's decision not to recommend her for a panel of local government candidates.
Ms Dyer, of Glasgow, has now lodged a civil action at the city's sheriff court seeking £18,000 plus interest, claiming the party and its general secretary have breached the Equality Act.
Labour denies the allegations and claims the amount she is claiming is excessive.
Papers lodged at the court state Ms Dyer has been "subjected to discrimination on the grounds of the protected characteristics of sex and age".
She joined the Labour Party in 1980 and stood as a regional list candidate for Glasgow in 2011 but was unsuccessful.
Following that election, the party decided to re-interview its councillors and potential candidates for the local council elections the following year.
Ms Dyer, who was 63 at that point, claims one of the reasons she was ruled out for recommendation was because of her age.
The papers state: "The majority of rejected candidates and councillors were over the age of 50. The defenders were motivated, consciously or subconsciously, by the age of candidates in determining which candidates would be chosen for the panel."
Ms Dyer is also claiming for sex discrimination, which she believes stems from the party's expectations of candidates as outlined in its Candidate Agreement. The agreement is understood to state that candidates should contact 300 different individuals every month – a proposal Ms Dyer claims puts women at a disadvantage.
The statement on her behalf adds: "The requirement for 300 contacts per month placed female candidates at a particular disadvantage in comparison with male candidates.
"Female candidates were more likely to be participants of and contributors to voluntary and community organisations and school parent associations than men and were more likely to have caring responsibilities and accordingly have greater pressures on their personal time.
"As such more female candidates than male candidates were likely to fail to achieve the target of 300 contacts per month.
"Such a failure to achieve targets was likely to adversely affect those candidates' prospects of selection onto the panel of local government candidates able to be elected."
This claim is also reported to have been backed by the Glasgow Labour Women's Forum, of which Ms Dyer was the chairwoman.
Labour claims that, as Ms Dyer was never selected as a candidate, she was never subject to the Candidate Agreement.
A statement lodged on the party's behalf adds: "Of the 15 women candidates selected to stand in council wards, only one could not regularly meet the target of 300 contacts per month due to ill health."
It claims Ms Dyer was rejected as she was deemed weak in the areas of "personal effectiveness" and "political judgement".
Following Labour's decision, Ms Dyer lodged an appeal with the party but it was rejected.
A Scottish Labour spokesman said: "Scottish Labour has robust, fair and transparent selection procedures to ensure the best possible candidates are given the chance to represent their communities."
The Herald was unable to contact Ms Dyer.
A full hearing will take place in June.