Yale’s president called the lawsuit “baseless” and “unfounded.”

The Department of Justice has sued Yale University for allegedly discriminating against Asian American and white undergraduate applicants.

In a complaint filed Thursday, the department charged that “Yale’s race discrimination includes imposing undue and unlawful penalties on racially-disfavored applicants, including in particular most Asian, and white applicants.”

The lawsuit follows a two-year civil rights investigation into the Ivy League institution, in response to a complaint by Asian American groups, which found that race was a factor in hundreds of admissions decisions each year, officials said.

“All persons who apply for admission to colleges and universities should expect and know that they will be judged by their character, talents, and achievements and not the color of their skin,” Assistant Attorney General Eric Dreiband for the Civil Rights Division said in a statement. “To do otherwise is to permit our institutions to foster stereotypes, bitterness, and division.”

The DOJ’s complaint alleges that Yale has violated Title VI of the 1964 Civil Rights Act.

Title VI of the 1965 Civil Rights Act prohibits discrimination on the basis of race, color or national origin in programs that receive federal financial assistance. The Supreme Court has ruled that colleges that receive federal funds can consider an applicants’ race, along with other factors, though the complaint alleges that Yale violates Title VI by “subjecting domestic, non-transfer Asian and white applicants to Yale College to unlawful discrimination on the ground of race.”

According to the complaint, Yale receives over $630 million annually in federal funds.

In mid-August, the DOJ demanded that Yale stop using race or national origin in its upcoming 2020-2021 admissions cycle, and gave the university until Aug. 27 to comply with its demands or risk facing a federal lawsuit.

At the time, Yale said it did not plan to change its admissions process. According to the complaint, Yale declined an “opportunity for voluntary compliance without litigation.”

Yale’s president, Peter Salovey, called the DOJ’s lawsuit “baseless” and its allegations “based on inaccurate statistics and unfounded conclusions.”

“I want to be clear: Yale does not discriminate against applicants of any race or ethnicity,” he said in a statement. “Our admissions practices are completely fair and lawful. Yale’s admissions policies will not change as a result of the filing of this baseless lawsuit. We look forward to defending these policies in court.”

The lawsuit is seeking a permanent injunction prohibiting Yale from using race as a factor in future undergraduate admissions decisions and damages for “the United States and injured applicants.”

The DOJ has also accused Harvard University of discriminating against Asian American students and “engaging in outright racial balancing.” A federal judge cleared the school of discrimination in 2019, though an appeal of the ruling is playing out in court.

ABC News’ Luke Barr contributed to this report.