By Fiona Ortiz

CHICAGO (Reuters) - Filmmaker George Lucas is pulling his "Star Wars" museum project out of Chicago in favor of a California location after he ran into legal challenges from an open-spaces group in Chicago, he said on Friday.

Lucas blasted the parks group that had sued to stop the building of the museum on the Lake Michigan shore in an area that is currently a parking lot for a sports arena.

"No one benefits from continuing their seemingly unending litigation to protect a parking lot," he said in a statement from the museum.

The statement said the museum's leaders confirmed it would now be located in California but did not specify in which city.

Friends of the Parks, the group that filed suit last year to stop the museum project, did not immediately respond to requests for comment. The group argued the museum would be an eyesore on the waterfront and that it violated public use policy governing development on the shore of Lake Michigan.

Mayor Rahm Emanuel had pushed for the project, saying it would bring jobs, investment and tourism to Chicago. He lamented Lucas' decision, which came after he and other political leaders had tried to negotiate with the parks group.

"Chicago's loss will be another city's gain," Rahm said in a statement. He said the city was losing a $1.5 billion gift.

The proposed museum would feature exhibitions of Lucas' collection of paintings, illustrations and digital art from the blockbuster "Star Wars" movie franchise he started in 1977.

The Chicago location was announced in 2014 and approved by Chicago's City Council, the park district, planning commission and state officials.

Los Angeles Mayor Eric Garcetti immediately stepped up his quest to woo the museum to his city with a statement saying: "The Lucas Museum of Narrative Art would be perfect for Los Angeles."

A judge had allowed the lawsuit filed by Friends of the Parks to move forward, which spurred Emanuel's office into negotiations.

Emanuel's office offered an alternative site for the museum, but it also was on the lakefront and the parks group said it would also try to block that location in the courts.

Lucas' wife, Mellody Hobson, is one of the main drivers of the project and was very interested in putting the museum in Chicago, her hometown.

(Additional reporting by Karen Pierog in Chicago and Alex Dobuzinskis in Los Angeles; Editing by Chris Reese and Bill Trott)