The name merges Chi-town with Iraq -- as if Chicago sinks like the godforsaken Iraq, a hopeless war zone to the world.
The label signals a long fall for Chicago, whose official motto is the elegant "Urbs in Horto," or "City in a Garden." Once upon a time, Chicago even inspired poetry when Carl Sandburg declared it the "City of the Big Shoulders."
But "Chiraq" is another story altogether for America's third-largest city.
It's a relatively new byword, and it's now reportedly the working title of a drama that Lee is filming in the most violent neighborhoods on Chicago's South Side and elsewhere in the city.
The very name has ignited a political firestorm, especially in City Hall, where Mayor Rahm Emanuel and others dispute any suggestion that Chicago is home to gunplay and death.
Some of Hollywood's biggest names
On the other side of the dispute is an all-star Hollywood cast in Lee's movie: Samuel L. Jackson, John Cusack, Jeremy Piven, Wesley Snipes, Nick Cannon and even South Side native and songstress Jennifer Hudson, according to IMDb.com.
Not surprisingly, Lee's latest film polarizes Chicago. Lee is no stranger to provocative film making.
Many officials in Chicago want a Hollywood edit to the working title.
Cut it and create a new one, they say.
"I was clear that I was not happy about the title," the mayor said about Lee. "I told him also there are very good people that live in Englewood who are raising their family. There are a lot of positive things that are happening in Englewood."
Englewood is a neighborhood on Chicago's South Side. Singer Hudson is said to be a native of that neighborhood.
A 'deeply troubling' name
Alderman William Burns represents South Side neighborhoods next to Englewood, and he is so angry that he wants to see a reversal of tax credits given to the film.
"The name itself is deeply troubling," Burns said. "They don't view their neighborhood as Chiraq. They view it as Auburn Gresham or Englewood or Hyde Park or Kenwood, and they're very proud of where they live."
Gang members purportedly gave the city the nickname, Burns said.
"If you really want to stop the violence, you got to create living wage jobs. You got to create hope in these communities, and that means you have to get people to invest in those communities, and if the brand for those communities is 'Chiraq,' would you want to risk your capital? Would you want to take on debt to invest in a neighborhood called Chiraq?"
Lee: Artists must have no fear
For his part, Lee has been spending more time directing his cast on the streets of Chicago -- the talk of the town, for now -- than on responding to the controversy.
In a press conference in May, he indicated he has yet to announce the film's title as "Chiraq." A subsequent press release gave
the working title a less traditional spelling: "Chi-Raq."
"A lot of people have opinions about the so-called title of the film who know nothing about the film," Lee told reporters.
"Artists I love, whether it be painters, novelists, sculptors, writers, musicians, filmmakers, actors ... they hold a mirror up to what is happening in the world," Lee said. "And they do that with no fear.
"If you have fear then how are you going to tell the truth," Lee said.
Fighting for the next generation
Burns sees the dispute as a battle for the soul of a city -- as well as those of its children.
"It's vitally important that we try to protect the next generation of kids, give them hope, give them opportunity, so that they can contribute to society," Burns said.
Recent headlines called Chicago the "murder capital of the U.S." or "murder city"
as the city continues a yearslong struggle with rising and falling homicide rates, especially in poorer, less-educated, black neighborhoods such as Austin and Englewood.
The FBI's crime statistics in 2012 showed Chicago as having more homicides than any other U.S. city, with 503, even more than New York, which has three times the population.