The lawsuit, filed in a federal court in New Hampshire, alleged that three professors from the university's department of psychology and brain sciences perpetrated more than a decade of gender discrimination, sexual assault and harassment, despite trustees being aware of complaints.
The suit is expected to revive a debate about sexual boundaries at universities across the United States, which has come under renewed scrutiny in the wake of the #MeToo reckoning with sexual harassment.
On Friday, President Donald Trump's education secretary proposed to change the way in which sexual assault is investigated at US universities, giving more rights to the accused and narrowing the definition of harassment.
Survivors' advocates criticized the new measures from Betsy DeVos, which also seek to restrict the notion of sexual assault, limit evidence that is admissible and allow accusers to be cross-examined.
The lawsuit said Dartmouth "knowingly permitted three of its prominent (and well-funded) professors to turn a human behaviour research department into a 21st Century Animal House," in reference to the 1978 frat house movie.
"For well over a decade," continued the 72-page suit, female students at the department were "treated as sex objects by tenured professors Todd Heatherton, William Kelley and Paul Whalen.
"These professors leered at, groped, sexted, intoxicated and even raped female students," and conditioned faculty mentorship and support on students participating in an "alcohol-saturated 'party culture,'" the suit said.
They "conducted professional lab meetings at bars, invited students to late-night 'hot tub parties'" and invited undergraduates to use "real cocaine during classes related to addiction as part of a 'demonstration.'"
Cognitive neuroscientist Kristina Rapuano, 30, a postdoctoral researcher at Yale University and one of the plaintiffs, says Kelley forced her to drink to excess before sexually assaulting her at a conference in California.
The lawsuit claimed that Dartmouth, in the leafy town of Hanover in the northeastern state of New Hampshire, knew about the professors' bad behaviour for 16 years, from at least as early as 2002. The suit was filed on Thursday.
When a group of graduate students reported sexual harassment and sexual assault in 2017, the lawsuit says Dartmouth took no immediate action and encouraged the students to continue working with the professors.
The college waited nearly four months before placing the three professors on leave and in October 2017 the attorney general of New Hampshire opened a criminal investigation into the allegations.
The private university, where some 6,400 students are enrolled and where the total estimated cost of first-year attendance is $74,000, allegedly did nothing despite even being informed that students were in therapy.
"One graduate student explicitly told these administrators that this was a 'life or death situation,' and someone would commit suicide if Dartmouth refused to act," the lawsuit said.
In a statement, Dartmouth said the three professors had been sacked earlier this year and banned from campus and insisted that sexual misconduct had "no place" at the university.
"We respectfully, but strongly, disagree with the characterization of Dartmouth's actions in the complaint and will respond through our own court filings," it added.