Barbie dreams that she has been invited to the Fantasy Ball, but in her dream she has nothing to wear. She travels to three different worlds to gather accessories for the big night and a chance with Ken. Along the way she meets a veritable menagerie of animal friends and searches to find Dream-Ups, Glamor Items, and Charms for her bracelet that will help her along her way.

In Mall World, Barbie goes on a shopping spree for Barbie coins that she uses at the wishing fountain to acquire an exquisite pink ball gown. In Underwater World, Mermaid Barbie and a few helpful dolphins search for pearls that Barbie returns to a giant oyster in exchange for an elegant pearl ring. Finally, in the 1950s-style Soda Shop Barbie must collect gold records that she uses to make a stairway into the sky to collect the last accessory, a charming pair of sparkly high heels. Barbie returns to the Barbie Dream House to get ready for the Fantasy Ball, and as she descends the stairs wearing all of her accessories, a dapper Ken awaits to dance with her.

The game was designed by Hi Tech Expressions in an attempt to get more girls to play video games, although the developers tried to make the gameplay appealing to boys as well. Following the 1984 release of an earlier title also called simply Barbie, the game became the second in the Barbie series. Together with the later Barbie: Game Girl and Barbie: Super Model, the Barbie series was aimed at a young audience that Hi Tech Expressions listed as 3 to 9, and that third parties recommend to those 3 to 8.

The basic sales and research data that Hi Tech Expressions examined in designing the game suggested that girls tended to prefer activity-based or puzzle-oriented games than the shoot-'em-up games that were popular at the time. To accommodate this preference, the team included puzzles and mazes while avoiding any reference to blood and violence.

The game was originally slated for release in October 1991, but delays caused it to be released on December 31, 1991.

While noting that the game held little interest for the average gamer at its time of release, the game has been described in modern times as "not bad" for a generic platformer. On the other hand, critics have pointed out that the game feels like it has been shoehorned into an inappropriate genre for its content and that even for a platformer it is wholly unremarkable. Indeed, in her book, From Barbie to Mortal Kombat: Gender and Computer Games, Justine Cassell uses Barbie as an example of typical "pink" software—software designed with a male audience that is merely re-skinned for female gamers without regard for their different tastes in gaming. Cassell notes that in the design of the early 1990s Barbie video games, Mattel supervisors were only interested in the superficial visual appearances and left the game mechanics and development to third parties.

Barbie was discussed in 1992 by the United States House of Representatives during a hearing chaired by the Subcommittee on Intellectual Property and Judicial Administration (under the Committee on the Judiciary) in which it was noted that the game had been subject to frequent counterfeiting and related copyright and trademark infringements. The bulk of Barbie counterfeits were noted to have originally come from Taiwan, however at the time the counterfeiters were shifting operations toward Korea, Hong Kong, and China. As the House noted, the counterfeit operations that sought to infringe Barbie's intellectual property rights were large-scale and sophisticated operations working with the very latest ROM technology. Some of the counterfeit cartridges were essentially exact duplicates indistinguishable in quality from the original product.

In October 1992, the game was remade for the Game Boy under the title Barbie: Game Girl. The Game Boy game was also designed as a platformer and in many ways it presented a very similar feel to that of Barbie.