Barry, now a District of Columbia Council member, was selected as the last of the 50 figures to be displayed at the museum. He beat out nine other finalists chosen by museum officials, including Nancy Reagan, Oprah Winfrey and Cal Ripken.
The museum's general manager, Janine DiGioacchino, said staffers visited places like Union Station and the National Mall to ask people who they would like to see displayed.
"The response was an overwhelming landslide for council member Marion Barry," DiGioacchino said.
Madame Tussauds is set to open in October and will be located downtown in the former Woodward & Lothrop department store, a Washington landmark.
Barry's wax figure will be displayed along with the likes of George Washington, President Bush, Martin Luther King Jr., and Muhammad Ali.
"It is truly extraordinary to have such an honor bestowed upon myself and the people of Washington, D.C.," Barry said in a statement. "I am tremendously excited and deeply humbled to be placed in such a select group of great Americans."
Barry served four terms as mayor. In his third term, he was videotaped in 1990 in a hotel room smoking crack cocaine in an FBI sting. He served a six-month prison sentence and in 1994 regained the mayor's office for another four-year term.
The Tussauds Group operates six wax museums around the world, including the original in London. In the United States, there is one in New York and one in Las Vegas.