The magazine's story, initially titled "Kash Patel's Erratic Behaviour Could Cost Him His Job," cited more than two dozen anonymous sources expressing concern about Patel's "conspicuous inebriation and unexplained absences" that "alarmed officials at the FBI and the Department of Justice".
The article, which the Atlantic subsequently titled "The FBI Director Is MIA" in its online version, reported that during Patel's tenure, the FBI had to reschedule early meetings "as a result of his alcohol-fuelled nights" and that Patel "is often away or unreachable, delaying time-sensitive decisions needed to advance investigations".
In the Atlantic's story, the White House, the Department of Justice and Patel denied the allegations.
The article included a statement from the FBI attributed to Patel, "Print it, all false, I'll see you in court - bring your chequebook".
"The Atlantic's story is a lie," Patel said in an interview with Reuters.
"They were given the truth before they published, and they chose to print falsehoods anyway."
"We stand by our reporting on Kash Patel, and we will vigorously defend the Atlantic and our journalists against this meritless lawsuit," the Atlantic said in a statement.
Reuters could not independently establish the accuracy of the article or why the publication changed the title.
Patel's complaint says that while the Atlantic is free to criticise the leadership of the FBI, "they crossed the legal line" by publishing an article "replete with false and obviously fabricated allegations designed to destroy Director Patel's reputation and drive him from office".
The lawsuit, filed in US District Court for the District of Columbia, seeks $US250 million ($A349 million) in damages.
The lawsuit alleges the Atlantic ignored the FBI's denials and did not respond to a Friday letter from Patel's lawyer Jesse Binnall to senior editors and the Atlantic's legal department asking for more time to refute the 19 allegations the reporter told the FBI's press office she would be publishing.
The letter, which Reuters has seen, was sent shortly before 4pm on Friday and the Atlantic published the story at 6.20pm, according to the complaint.
Reuters could not establish how or if the Atlantic responded to Binnall's request.
The lawsuit alleges the publication acted with "actual malice," a legal standard that requires public figures such as Patel to show the publisher knowingly printed false information or recklessly ignored doubts about its accuracy.
"Defendants' conscious decision to ignore the detailed, specific and substantive refutations in the Pre-Publication Letter, and their refusal to give a reasonable amount of time for the FBI and Director Patel to respond, is among the strongest possible evidence of actual malice," the lawsuit says.
The Supreme Court has set a high bar for defamation claims that requires a public figures like Patel to prove that the Atlantic, or its reporter, knew its reporting was false and published it anyway.
