Is it permissible to buy or sell toy dolls? Halacha forbids making a complete, three-dimensional figure of a human being. Would this prohibition include toy dolls?
Chacham Ovadia Yosef writes in Halichot Olam (vol. 7, p. 281) that purchasing, owning or selling dolls is permissible. He explains that Halacha forbids possessing figures of human beings because they give the appearance of idolatrous articles. When it comes to toy dolls, however, it is clear to all that they serve as toys for children, and are not used as objects of worship. Furthermore, children generally use dolls in a disrespectful manner, throwing them around on the floor, stepping on them, and so on, and therefore they cannot be mistaken for articles of idolatry.
However, if a person receives a trophy with a complete image of a human being, and he wishes to place it on his mantle, this may, indeed, violate the prohibition of possessing images of a human being. One should therefore disfigure the image or remove one of the trophy's body parts, such as an arm or the nose. The Shulchan Aruch rules that the prohibition applies only to complete images of a human being, and therefore once a body part is removed from the trophy one may keep it in his home.
Summary: One may purchase, own or sell toy dolls. Trophies containing a complete image of a human being should not be kept in one's home unless it is somehow disfigured such that it is no longer a complete image.