The Civil Aviation Authority (CAA) claims the Dublin-based airline is not complying fully with European consumer law designed to support passengers following flight disruption.
Ryanair are not paying proper compensation for delays caused by technical faults and are attempting to impose a two-year claim limit from the date of the flight, according to the CAA.
The regulator's chief executive, Andrew Haines, said: "The law is clear that compensation must be paid if a flight is delayed for more than three hours by a routine technical fault.
"It is also clear that air passengers have up to six years to issue a compensation claim at court. This position was reaffirmed by the Court of Appeal last year.
"The CAA is committed to protecting the rights of air passengers and we are determined to ensure all airlines comply with this regulation."
The CAA's review of airline policies has already led to Jet2, Aer Lingus and Wizz Air changing their positions.
But Ryanair insisted that it "fully complies" with compensation rules, adding that they are "a fundamental part of our customer charter".
The airline's director of customer service, Fiona Kearns, said: "Ryanair has requested an early meeting with the CAA to clarify any misunderstandings that may have arisen in dealing with some historic cases."
On Thursday the European Court of Justice found in favour of a Dutch couple who were refused compensation by KLM because of a delay caused by a technical problem.
Richard Lloyd, executive director of Which? said: "The regulator is right to take legal action against any airline that is failing to comply with the law. Airlines must be held to account and consumers should claim the compensation they are rightly owed if they have a lengthy delay and their carrier is at fault."
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