The winning sticker was designed by 15-year-old Herbie Pulgar who attends a school for troubled youth.
The clerk's office started getting phone calls Tuesday after an Internet blogger identified the hands drawn on the sticker as symbols flashed by members of a street gang.
The controversial stickers were not printed yet.
Mendoza said the runner-up sticker design will be used instead. She said she was shocked by the allegations and, most of all, she hopes they're not true.
"Unfortunately, whether or not the design was meant to include potential gang symbols, the perception that now exists is that the artwork could be misinterpreted as containing gang related symbols," Mendoza said.
Pulgar says he is disappointed and is defending his work.
"I feel mad," Pulgar told ABC7. "I cannot be mad at the world because the world didn't do nothing to me. I can be proud of myself."
Pulgar was on his way to getting back on track and says winning the contest bolstered his confidence. The teen says his artwork was honoring the first responders who use helping hands to save lives.
"In no way, shape or form did the art design have any gangs symbols, any gang designs or nothing on the picture. I just put my heart into it and I tried to make my mom proud," he said.
"I feel very sad something so positive can turn so negative," said Pulgar's mother, Jessica Loor. "It's very painful to see how cruel people can be and take his drawing and intertwine it with something that is not there."
Loor says she and her son haven't been able to sleep since police-related blogs suggested that Herbie's winning city sticker design includes gang signs, specifically the hands and the heart, which gang experts say are similar to a specific Chicago street gang.
While the police blogs show conversations from Pulgar's Facebook page that allegedly included gang-related conversation, the teenager's mother says her son is not in a gang.
Pulgar came up with the design in his art class at Lawrence Hall Youth Services, a Northwest Side therapeutic day school. His teacher, Janice Gould, says she worked with him to come up with the picture, even giving him a sketch of hands to copy. The design shows four hands lifted upward toward the symbols of first responders.
"My heart is broken because I saw a young man work for two months straight trying to develop a design," said Gould.
"This isn't about him," said Clerk Mendoza. "It is about the perception that now exists, that none of you can deny, a perception that clearly exists that this could somehow create some support or a sign that it's related to gangs."
Runner up Caitlin Henehan,17, a student at Resurrection High School, has mixed emotions about the honor. "I feel honored, I feel, total surprise ... I feel sorry for him, for it to be taken away, that's heartbreaking," she said.
Clerk Mendoza says she plans to sit down and talk to Herbie Pulgar about her decision. According to a spokesperson for the City Clerk's Office, officials are reviewing whether Pulgar will get to keep his prize of a $1,000 savings bond.
Around 18,000 Chicagoans voted for the boy's design late last year in a contest. The teen's design was chosen from hundreds of drawings submitted by high school students throughout the city.
The boy's family is considering legal action.