First hijab-wearing Barbie honours US fencer Ibtihaj Muhammad
Muhammad won Bronze in the women's Team Sabre event at the 2016 Rio Olympics, becoming the first ever Muslim-American women in US history to earn a medal.
The doll, which will be on sale online from 2018, is part of the American toymaker's "Sheroes" collection and is dressed in fencing gear as well as the hijab.
The 31-year-old athlete described the doll created in her image as a "childhood dream come true."
"Thank you @Mattel for announcing me as the newest member of the @Barbie #Shero family! I'm proud to know that little girls everywhere can now play with a Barbie who chooses to wear hijab!" she wrote on Twitter.
Mattel said the new Barbie is "inspiration for countless little girls who never saw themselves represented in sports and culture," adding it hopes the doll "shows girls they can be anything."
"We are so excited to honor @IbtihajMuhammad with a one-of-a-kind #Barbie doll! Ibtihaj continues to inspire women and girls everywhere to break boundaries," Mattel wrote on its social media accounts, accompanied by a photo of Muhammad holding the doll.
Users on social media welcomed the move, calling it an important step in recognising and representing the diversity of American society.
"We now finally have in 2017 a hijab wearing @Barbie with the last name Muhammad. Say it again for the People in the back: REPRESENTATION MATTERS", rights activist Qasim Rashid wrote on Twitter.
"Barbie finally modeled a doll after a Hijabi Muslim woman -- and it's modeled after black Olympian Ibtihaj Muhammad. This is going to mean everything to young Muslim girls", academic Simran Jeet Singh wrote.
The doll also provoked a slew of Islamophobic and racist comments online. "JIHAD BARBIE! ISIS Ken sold separately", wrote right-wing US columnist Ann Coulter.
Earlier this year Muhammad was held at US customs for two hours with no explanation, saying she was sure the move was based on her ethnicity and religion.
She has previously said the US needs to do more to make the country more inclusive, saying diversity is America's greatest strength.
Anti-Muslim hate crimes in the United States increased 91 percent in the first half of 2017 compared to the previous year, according to the Council on American-Islamic Relations (CAIR).