The ad, which appeared in Vice magazine, has been banned as a result.
Although American Apparel insisted that the model was 23 years old, the ASA ruled that she looked as though she is under the age of 16 years and may cause offence to some readers.
The retailer claimed the ad was intended to appeal to women and depicted the model in a relaxed 'home' environment wearing a hoody in a number of confident poses, in the way a consumer might wear it at home.