The decision comes after the criticism of the law did not lead to any action by the government in Budapest.
"The Commission considers that this law violates the rules of the internal market and the protection of the fundamental rights of individuals," spokesman Christian Wigand explained at the Commission's daily press briefing in Brussels.
The European Commission began its formal process against the law exactly one year ago, after it was voted through by the Hungarian Parliament in June last year.
Sex education is also affected
The law strikes at, among other things, advertising and other mass media products that show "deviations from someone's biological gender and gender reassignment and spread or portray homosexuality" for people under 18 years of age.
Television and radio in Hungary shall only be allowed to show such material between 10 pm and 5 am, in order not to risk fines or revoked licenses.
Sex education for minors is also affected by the legislation, which the Hungarian government believes is there to protect minors.