The lawsuit stems from Forbes' March issue, in which Talal is named the 26th most wealthy billionaire on the planet with an estimated worth of $20 billion, The Guardian reported Thursday.
The prince says he is worth closer to $30 billion and accused Forbes of being "demonstrably biased" against Saudi Arabian firms.
Talal filed the defamation lawsuit in the high court in London, naming the Forbes publisher, its editor Randall Lane and two of its journalists as defendants, court records show.
"We're very surprised at claims that Prince Alwaleed has decided to sue Forbes, particularly if he has done so in the United Kingdom, a jurisdiction that has nothing whatsoever to do with our recent story which raised questions about his claims about his wealth," Forbes said in a statement.
"The prince's suit would be precisely the kind of libel tourism that the U.K.'s recently passed libel reform law is intended to thwart," Forbes said. "We would anticipate that the London high court will agree. Forbes stands by its story."