Creator of US icon, the Barbie doll

Ruth Handler: For most of history, dolls represented adult women, and were dressed as such

Ruth Handler: For most of history, dolls represented adult women, and were dressed as such. Although even the miniature mannequins Paris sent around Europe in the 18th century to model the latest fashions were called "babies", they did not have juvenile identities. Baby dolls only became popular in the late 19th century, and their command of the market ended after the 1959 American Toy Fair, when Ruth Handler, who died on April 26th aged 85, exhibited a full-grown doll named after her daughter Barbie.

Barbie has sold more than a billion in 150 countries; she is a fixture in the Smithsonian Institution and was buried in the official US bicentennial time capsule in 1976. According to M.G. Lord, her unauthorised biographer, she is "the most potent icon of American culture of the late 20th century".

Her creator had been short on playthings in her Denver childhood, as the youngest of 10 children of a Polish blacksmith and his frail, illiterate wife; she got out at 19, holidaying in Hollywood, never to come home - her high school boyfriend, Elliot Handler, joined her, and they married in 1938. He studied industrial design: he made simple things - bowls, mirrors - in the new plastics for their home, and she persuaded him to manufacture them on a bigger scale in the garage. They turned over $2 million a year by 1942, when the couple joined Harold "Matt" Mattson to make picture frames.

The 1940s were the great age in the US of the dolls' house, that dream tract home in small scale, propaganda for the post-war return of Rosie the Riveter to the kitchen, and the three made dolls' furniture from wood and plastic scrap left from the frames. They called their toy company Mattel; Matt as in Mattson and El as in Elliot. Mattel was in harmony with the new US kiddie culture with the Uke-A-Doodle, a child-sized ukulele, and the Burp gun, detonating caps, the first toy to be marketed on television beyond the Christmas season.

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Elliot's ideal doll was the talking Chatty Cathy, which he developed through the 1950s, but his wife was less interested in what could be extruded in plastic and more in the playtime of her own daughter, Barbara, "Barbie". Barbie didn't want to cuddle a facsimile baby; she liked paper dolls, two-dimensional figures whose clothes and accessories were easily changed with fold-over tabs; the figures were usually adult, and fashionably dressed. Ruth Handler wondered if they could be manufactured three-dimensionally. That meant breasts and Mattel's all-male executives were sure that no parents would buy bosomy dolls. They rejected the idea more than once.

On holiday in Europe in 1956, Ruth Handler saw a German doll, Lilli, a prop for sexual fantasy. Lilli's shape was unarguably three-dimensional - in fact voluptuous - based on a cartoon like an Alberto Varga pin-up (big bust, elongated legs and vestigial feet thrust into high heels). She brought Lilli back to Mattel and commanded plans for her mass production in Japan, with its strong doll tradition and low manufacturing costs.

The original "Barbie Teen-Age Fashion Model" of 1959 wore a blonde ponytail and a zebra-striped swimsuit. She hit the counters at $3 and walked off them - well, perhaps tottered, given her stiletto heels. It was decades before Barbie considered flatties. Mattel sold more than 350,000 the first year and soon the company was making an annual $100 million. She was regularly updated - her hair went Jackie during the Kennedy years - and she left behind those small-town outfits, for a Friday night date, for Oscar ceremony designer gowns and executive suits with matching laptop.

Boyfriend Ken, named after the Handlers' son, arrived in 1961; followed by Midge, Skipper and African-American Christie, Barbie's first ethnic friend, in 1969. Black Barbie had to wait until 1981, but after that, she came customised to locality. Masai Barbie was big in Kenya.

Ruth Handler asserted that Barbie's purpose was to allow a girl "to project herself into her dream of her future". That doll-sized dream expanded, as did the aspirations of real women: the high-schooler became an astronaut, athlete and teacher - Barbie, said Ruth Handler, always "represented the fact that a woman has choices".

Barbie's physical dimensions caused resentment - the National Organisation for Women once calculated that if was she were 5ft 6in instead of 11½ inches tall, her measurements would be 39-21-33, and the chances of a real woman with those proportions are one in 100,000. However improbable, Barbie was celebrated by generations of artists, including Andy Warhol; her adult collectors, with their mantra "Never out of the box", treated her like statues of the Virgin in traditional Catholic communities, as votive figures to be lavishly adorned for festivals.

By 1966, when Mattel controlled 12 per cent of the $2 billion US toy market and had 15,000 employees, new corporate managers were deciding to diversify out of toys. Ruth Handler was diagnosed with breast cancer in 1970, which left her "unfocused" about the reorganisation. After her mastectomy, this self-described marketing genius couldn't "get back in and grab hold" of the company, and in 1975, the Handlers were forced out of being co-chairmen of the board. Life worsened further in 1978 when Ruth Handler was indicted on charges of fraud and false reporting to the Securities Commission, pleaded no contest, was fined $57,000 and sentenced to 2,500 hours of community service.

She had by then founded a new company, Ruthton Corporation; its product, like Barbie, was the direct result of experience. After her mastectomy, her doctor told her to stuff her empty bra cup with rolled-up stockings, and when she asked a saleswoman in a Beverly Hills department store for an artificial breast, she was handed a surgical bra and a couple of gloves: she was supposed to stuff the bra with the gloves. Both approaches lacked a certain veracity. The available prosthetic breasts, when located, were a "shapeless glob that lay in the bottom of my brassiere. The people in this business are men who don't have to wear these." Ruth Handler's product, the Nearly Me prosthetic, was liquid silicone in polyurethane with a foam backing; it came in lefts and rights ("there has never been a shoemaker who made one shoe and forced you to put both your right and your left foot in it") and normal bra sizes, so real that "a woman could wear a regular brassiere, stick her chest out and be proud".

Breast cancer was not then the popular cause of American fashionables. It was unmentionable. Ruth Handler mentioned it a lot. She and her sales team fitted women (including First Lady Betty Ford) and trained sales staffs. She did her "strip act", taking off her blouse (even for People magazine's photographer) to demonstrate the lack of difference in look or feel between real and fake. She made the business a million-dollar one by 1980 and in 1991 sold it to a division of Kimberly-Clark. "I didn't make a lot of money in it," she said. "It sure rebuilt my self-esteem, and I think I rebuilt the self-esteem of others." Ruth Handler retained a gold-plated Barbie in her Century City apartment and kept track of her plastic offspring's place in popular consciousness. On the official Barbie website on the day of her death, the motto on the parents' page was "Today's play, tomorrow's career", beside pictures of both black and white Doctor Barbies, and a note that medicine would be better when there was "gender parity in the profession". Everybody could vote for "Barbie's new career - librarian, architect or policewoman?" As culture commentator Michelle Erica Green wrote of Barbie: "what other woman has come so close to having it all?" Ruth Handler's son Ken died in 1994. She is survived by her husband and daughter.

Ruth Mosko Handler: born 1916; died, April 2002