Mary Trump identified herself in a book published last year as the source of the documents provided to the Times.
Trump's lawsuit alleges Mary Trump, the Times and its reporters "were motivated by a personal vendetta" against him and a desire to push a political agenda.
The defendants "engaged in an insidious plot to obtain confidential and highly-sensitive records which they exploited for their own benefit and utilised as a means of falsely legitimising their publicised works," the lawsuit said.
In a statement to NBC News, Mary Trump said of her uncle, "I think he is a loser, and he is going to throw anything against the wall he can. It's desperation. The walls are closing in and he is throwing anything against the wall that he thinks will stick. As is always the case with Donald, he'll try and change the subject."
A Times spokesperson, Danielle Rhoads Ha, said the lawsuit "is an attempt to silence independent news organisations and we plan to vigorously defend against it."
The Times' coverage of Trump's taxes, she said, "helped inform citizens through meticulous reporting on a subject of overriding public interest".
One of the Times reporters, Craig, responded in a tweet: "I knocked on Mary Trump's door. She opened it. I think they call that journalism."
Trump is seeking US$100 million in damages.
Trump filed his lawsuit almost a year to the day after Mary Trump sued him over allegations that he and two of his siblings cheated her out of millions of dollars over several decades while squeezing her out of the family business.
That case is pending.
Mary Trump, 56, is the daughter of Donald Trump's brother, Fred Trump Jr, who died in 1981 at age 42. Mary Trump was 16 at the time.
Trump's lawsuit focuses only on the Times' 2018 story, a Pulitzer Prize finalist. It makes no mention of another Times scoop on Trump's taxes last year, which found he paid no federal income taxes in 10 of the previous 15 years.
According to the lawsuit, Mary Trump came into possession of more than 40,000 pages of "highly sensitive, proprietary, private and confidential documents" through a legal case involving Fred Trump's will.
The documents including financial records, accountings, tax returns, bank statements, and legal papers pertaining to Donald Trump, Fred Trump and their businesses, Trump's lawsuit said.
In 2001, about two years after Fred Trump died, Mary Trump and other family members entered into a settlement agreement with confidentiality and non-disclosure clauses that barred them from sharing information about Fred Trump's estate in, among other venues, newspaper stories, Trump's lawsuit said. The agreement also covered the estate of Fred's wife, Mary Anne Trump, who died in 2000.
Trump, who bashed the Times repeatedly during his presidency as the "failing New York Times," noted in the lawsuit that the 2018 article was viewed more online than any previous Times article and that the New York Times Company's stock price jumped 7.4 per cent the week it ran.
The Times' story said that Donald Trump and his father avoided gift and inheritance taxes by methods including setting up a sham corporation and undervaluing assets to tax authorities. The Times says its report was based on more than 100,000 pages of financial documents, including confidential tax returns from the father and his companies.
Mary Trump's book, Too Much and Never Enough: How My Family Created the World's Most Dangerous Man, debuted in the midst of Donald Trump's re-election campaign last year. Donald Trump's brother, Robert, tried unsuccessfully to have a court block the book's publication, citing the 2001 settlement agreement.
Ruling in Mary Trump's favour, a judge said the confidentiality clauses, "viewed in the context of the current Trump family circumstances in 2020, would '…offend public policy as a prior restraint on protected speech".
In the book, Mary Trump recounted providing the family financial records that underlaid the Times' reporting. The book sold more than 1.3 million copies in its first week and soared to No 1 on the Times' bestseller list.
In an interview connected with the release of the book, Mary Trump told ABC's George Stephanopoulos she didn't feel the non-disclosure agreement "mattered one way or the other because what I have to say is too important".
