It comes amid investigations by special counsel Robert Mueller III of conspiracy between Trump associates and the Russian government during the presidential campaign past year.
The two attorney generals argue in the lawsuit that President Trump's actions harm their "sovereign interests" as states that interact with Mr. Trump's company could receive special treatment from the federal government.
But if the lawsuit is successful, the big payoff could be finally getting a look at Trump's tax returns.
Racine and Frosh allege Trump's leases, properties and other business "entanglements" around the world pose a conflict of interest under a clause of the constitution.
Attorneys general for Washington, D.C. and Maryland are suing President Trump for accepting millions in payments from foreign governments which they say is "flagrantly violating" the Constitution's anti-corruption laws.
Trump's adults sons, Eric Trump and Donald Trump Jr., and a longtime corporate executive, now oversee the Trump businesses.
Another suit, filed earlier this year by D.C. watchdog Citizens for Responsibility and Ethics in Washington, the Restaurant Opportunities Centers United Inc., and two individuals, alleged that Trump had been in violation of the clause since he took office.
In March 2017, a leak revealed that Trump and his wife Melania paid a total of Dollars 38 million in federal income tax in 2005.
The suit, a signed copy of which Racine and Frosh provided to the Washington Post Sunday night, accuses Trump of "unprecedented constitutional violations". The clause prohibits the president and other government employees from accepting foreign gifts and payments without congressional approval. "As state attorneys general representing the people, we have a duty to serve as a check and balance against the president, whose business activities have opened the door to the type of corruption the Framers of our Constitution aimed to prevent".
AG Racine told Reuters in a March interview that the District of Columbia has suffered particular harm because it subsidized the construction of hotels that are now impacted by foreign payments to Trump properties.
What do you think of Trump's business connections? As part of their strategy, Frosh said the attorneys general intend to seek access to Trump's financial records, including his tax returns, to determine the extent of his potential conflicts of interest. He continues to take money from foreign governments...
The White House says a lawsuit filed by the attorneys general of Maryland and the District of Columbia is driven by partisan politics and the president hasn't violated the Constitution.
His Maryland counterpart, Brian Frosh, added: "The president, above all other elected officials, must have only the interests of Americans at the heart of every decision".
Frosh described the Emoluments Clause as a firewall. We understand the President understands the value of walls. "This is one he can't climb over and it's one he can't dig underneath". The Saudis spent $270,000 at Trump's hotel while lobbying against the Justice Against Sponsors of Terrorism Act (JASTA), which would allow US citizens to sue other governments for terrorist attacks.
A group of Congress Democrats also said last week that they were planning to file similar suit soon, according to local media reports, noting that each of the suits has faced legal hurdles over standing to sue the president.