Wearing, who won the Turner Prize in 1997, claimed that M&C Saatchi plagiarised one of her video art works, called 10-16.
Saatchi, well known as one of the UK's biggest collectors of contemporary art, brought one of three copies of the 10-16 piece in 1997. The 15-minute video shows scenes of adults mouthing words, but being lyp-synched with children's voices, as they talk about school and sex.
According to Wearing: "I'm furious. When my gallery sold 10-16 to him [Saatchi], I assumed it would be safe. I think it's appalling for somebody to purchase a piece of your work and decide to make a commodity out of it."
She added:"I rang Saatchis to complain. They told me they had consulted lawyers before deciding to make it and that it was okay for them to be inspired by another film."
Wearing, -- who last year accused BMP DDB of stealing her work for a VW campaign -- still owns the copyright to 10-16 and plans to consult a lawyer. She said that she would never allow Saatchi to buy another of her works.
A spokesman for M&C Saatchi, said: "I will only say that lip synching is used extremely commonly in advertising. We did it for another campaign not so long ago."