Gomez's budget-conscious collection will include sportswear, handbags, belts, scarves, hats, hair accessories, socks, and hosiery all aimed at juniors. The line will grow to include shoes in October.
"I am proud to be able to join forces with Kmart to release my own fashion collection!" the 17-year-old Disney star said in a release.
"This has been a dream of mine for as long as I can remember, and I feel privileged to be able to give the consumer great product at a great value."
Gomez, who was named Favorite Television Actress at Nickelodeon's Kids' Choice Awards last weekend, is one of Hollywood's most in-demand young stars.
Her first album, "Kiss & Tell," just went gold, her upcoming film, "Ramona and Beezus," hits the big screen a week after her clothing line debuts, and she'll start production on "Monte Carlo," starring Nicole Kidman, next month.
Kmart is late in courting the teen market with a celebrity who resonates with young women. Kohl's has Avril Lavigne, Walmart has Miley Cyrus, and JCPenney has Mary-Kate and Ashley Olsen's Olsenboye. The arrival of Gomez and Dream Out Loud is expected to make Kmart a player in this arena.
Interestingly, Gomez was featured in Sears' back-to-school campaign last September (Sears and Kmart are both owned by the Sears Holdings Corporation).
See which other teen superstar is getting into the fashion game with a line of her own.