Beijing-based MAD created the giant-rabbit-shaped pavilion in a hutong – one of the city's old courtyard-house neighbourhoods – near Lama Temple.
Titled Wonderland, it is designed to provide a public space where children in the area can meet and play with each other.
The inflatable structure is white and its two lop ears protrude at a jaunty angle.
"Through the form of a rabbit, Wonderland brings a carefree spirit and sense of whimsy to this old Beijing neighbourhood," said MAD. "Its playful attitude provides an escape from reality."
At night, the interior of a structure is illuminated with a white light that provides a safe environment for children to socialise.
"Surrounded by its soft walls, under the blue sky and green trees, children can play, daydream and drift off into their own fantasy wonderland, in pursuit of happiness," added MAD.
The firm – which ranked at number 61 on the inaugural Dezeen Hot List – is currently working on a variety of projects in California, including the Lucas Museum of Narrative Art, which recently gained approval from Los Angeles city officials.
But the studio previously completed another project aimed at children – a curvaceous kindergarden with a slide along one wall.
The 6.5-square-metre Wonderland pavilion will remain erected for the duration of Beijing Design Week, an annual event that showcases the best of Chinese design. Dezeen is media partner for Beijing Design Week, which continues until 7 October 2017.