Ruth Handler had noted that her daughter Barbara preferred playing with paper dolls that looked like adults rather than like children. When in Europe, she noticed a German doll named Lilli and bought it for Barbara.

Lilli was a gold-digging character from a "racy" comic strip drawn by Reinhard Beuthin for die Bild Zeitung, and the Lilli doll began to be sold in Germany in 1955. It was marketed to adults, not children: M. G. Lord, in her Forever Barbie: The Unauthorized Biography of a Real Doll, characterized the original doll as a "gag gift for men, a pornographic character."

Ruth Handler says that when she bought Lilli for her daughter, she was ignorant of its adult nature. Ruth Handler and Elliott Handler, the co-founders of Mattel, bought the rights to market Lilli: with a hair color change from blonde to brunette, and a name change to Barbie (after Ruth's daughter Barbara) she was sold in the United States starting in 1959 at New York's annual Toy Fair.

The first Barbie doll had a black-and-white striped swimsuit and signature ponytail. In the succeeding years, Mattel fashion designer Charlotte Johnson based Barbie doll fashion designs on the Paris fashions.

Ruth Handler had stated that she thought it "was important to a girl's esteem that she play with a doll with breasts," and Barbie was certainly qualified to be that doll. If the doll originally marketed were human-sized, her measurements would have been 39"-18"-33". These measurements were not based on actual human metrics, and the unrealistic size of Barbie has been controversial, with many suggesting that playing with Barbie decreases rather than enhances a girl's self-esteem. In response to criticism, Mattel adjusted the chest measurement down, and the waist measurement up, though the proportions are still uncharacteristic of most women.

Redesigned by Jack Ryan and manufactured by Mattel, this one doll is a $1.9 billion dollar a year industry, with two Barbies being bought every second.