First created in 2011, the Knot cushion was born while Sigurðardóttir was trying to knit legs for a teddy bear on a machine rather than crocheting them by hand.
She ended up with a tubular length of material, which she then decided to tie together to form a pillow.
"I wanted to try tying the tubes into knots and seeing the outcome," said the designer, who runs her own studio called Umemi. "I found the idea of a big, soft knot intriguing in a fun kind of pop-arty way."
"I also like that when you take a first look at the cushion you might not really know what it is, and perhaps that is what draws you closer," she added.
The Knot cushion is now being produced by Design House Stockholm, which presented the design at Stockholm Furniture Fair from 9 to 13 February 2016.
It was immediately picked up by MoMA Store, according to Design House Stockholm founder and CEO Anders Färdig.
The cushion was originally named the Notknot. It is formed from stuffed knitted tubes that are tied up in pairs, forming a complicated shape where the ends are indeterminable.
Sigurðardóttir has created a series of variations, which are knotted in different ways and come in a range of colours.
"As a child I was in the scouts, and I was very good at doing knots," she said. "I have always been attracted to strange and unique things. I try to create unusual designs; products that are unpredictable and that make people curious."
Sigurðardóttir studied at the Iceland Academy of Arts and the Cranbrook Academy of Arts in Michigan, before opening her own studio in Reykjavík.
Other home products launched during this year's Stockholm Design Week include a range by Iittala and Issey Miyake, and updates to Claesson Koivisto Rune's Smaller Objects line.