Dikshit sent the defamation notice to Kejriwal for using 'filthy language' against her, reports said.
The notice has asked Kejriwal to withdraw his remarks and make a public apology for it.
According to reports, the Delhi Chief Minister's political secretary Pawan Khera sent the legal notice to Kejriwal through his lawyer Mehmood Pracha.
The India Against Corruption (IAC) activist reportedly used the word 'dalal' (broker) for Dikshit on a TV show recently.
Meanwhile, Kejriwal reacted to the notice and said he was not afraid of it.
"Yes we are defaming you. We will do it till the time you and your government continue with wrongdoings," Kejriwal said.
"Your misdeeds are defaming you. We are not afraid of your notices," he said.
Kejriwal has been protesting against the Delhi government in recent times over the issue of rising costs of electricity in the national capital.
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