The grocer will sell 22 different lines of men's, women's and children's clothing in 66 of its larger stores from February. The collection will form part of Sainsbury's TU fashion brand, but will also have the Fairtrade logo on its swing tickets.
Sainsbury's chief executive Justin King said: 'We know from selling Fairtrade food - and the increase in its popularity over the past 12 months - that our customers are supporting the Fairtrade mark and what it stands for. We expect this to be the case with Fairtrade clothing.'
Prices range from£8 to£15 and the casualwear collection will include T-shirts and hooded tops. Selected styles feature floral prints, raw edges and special washes.
If the launch is successful, the Fairtrade range will also be rolled out to other large stores.
Sainsbury's is the first UK retailer to use Fairtrade cotton from West African countries including Mali, Senegal and the Cameroon. It is working with a co-operative of farmers that will take decisions about how to invest money generated from the cotton production. Initiatives could include agricultural trading, drilling for water or building schools and clinics.
Sainsbury's placed the UK's biggest ever single order of Fairtrade certified cotton for Sport Relief T-shirts this summer.
Other UK retailers that sell Fairtrade clothing include Marks & Spencer and Topshop. Monsoon intends to launch a Fairtrade clothing range next month.
Tesco and Asda, meanwhile, both have fashion ranges made from organic cotton.
According to Sainsbury's, sales of TU clothing are soaring 65 per cent a year, although it declined to provide like-for-like figures.