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Two academics at the university's Centre for Peace and Conflict Studies, Jake Lynch and Stuart Rees, are due to respond to the complaint lodged by the Tel Aviv-based Shurat HaDin-Israel Law Centre this week.
The action in the Human Rights Commission alleges that, by targeting Israeli-owned or linked companies, BDS supporters breach laws making it unlawful for people to carry out acts that exclude or restrict others on the basis of race or ethnicity.
Professor Rees, who described the lawsuit as a threat to "freedom of public debate and the voicing of dissent", will address the "Speak out for Palestine" rally today outside the university's Fisher library.
He will be joined by NSW Greens upper house MP David Shoebridge, who risks embarrassing federal leader Christine Milne in the lead-up to the election by going against the federal party's policy of opposition to BDS.
Asked if the rally would disrupt students in the library, a spokeswoman for Sydney University vice-chancellor Michael Spence said rallies regularly were held there.
She said students who felt intimidated by proceedings should contact university authorities.
The action alleges BDS supporters breach sections of the 1975 legislation that make it "unlawful for a person to do any act involving a distinction, exclusion, restriction or preference based on race . . . national or ethnic origin which has the purpose or effect of nullifying or impairing the recognition, enjoyment or exercise, on an equal footing, of any human right or fundamental freedom in the political, economic, social, cultural or any other field of public life".
Professor Rees slammed the action as a "politically motivated attempt to intimidate, to stifle criticism and to impede (a) totally legal, non-violent, socially just stand".
Shurat HaDin, which models itself on the Alabama-based Southern Poverty Law Centre that has successfully used US courts to target the Ku Klux Klan, responded to the rally with a strongly worded statement. "Criticism of and protest regarding the policies of the Israeli government are perfectly legal," it said.
"When that protest extends to boycotting Israeli businesses and professors whose only connection to the Israeli government is that Israel is their national origin, that is unlawful racial discrimination. When those protests extend to intimidation of Israelis and Jews, that is unlawful racial discrimination."
The university spokeswoman repeated the university's opposition to the BDS movement but would not comment directly on the HRC proceedings.
"The University of Sydney does not consider the boycott, divestment and sanctions policy appropriate and it is not University of Sydney policy," she said. "But we defend academics' right to contribute to public debate and deliberations on issues spanning local, national and international boundaries and encourage academic staff to contribute to public comment in their area of expertise."
A spokeswoman for Senator Milne distanced her from Mr Shoebridge's stand. "The Greens reject the BDS and have never supported it in any way," she said.