The original names were inspired by "this historic time in our nation's history," company CEO Ty Warner said.
Warner said the dolls weren't intended to bear the likeness of President Barack Obama's daughters. But the name changes are in deference to the wishes of the Obama family, Warner said.
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First lady Michelle Obama had made it known using the names was inappropriate.
Her spokesman gave a statement to Crain's, saying, "We appreciate the company’s response to the matter."
The dolls have been renamed "Marvelous Mariah" and "Sweet Sydney," Oak Brook-based Ty Inc. said in a statement Tuesday.
Profits from sales of the original dolls will be donated to charity.
Crains reported that the decision to retire the dolls could make them more popular than ever. On Tuesday, the Sweet Sasha and Marvelous Malia dolls -- which originally sold for $9.99 each -- were selling on eBay for as much as $169 for a pair.
Chicago attorney Marc Cooperman, who has represented another toy company in lawsuits involving Beanie Babies' names, said he believes Ty Inc. got what it wanted: publicity.
"I would suspect that the company knew when it introduced the two dolls, they would cause some commotion and the company would get some press out of it," Cooperman said.