A small group of supporters watched the inflatable take to the skies, and the crowd cheered and shouted, "higher, higher, higher" as the balloon was launched.
Some wore T-shirts saying, "Make London safe again." Protesters believe Khan has failed to curtail street crime in London.
Organizers had raised more than 58,000 pounds ($75,000) to create the blimp in a protest against Khan's policies.
It was meant as a rebuke to Khan, who backed protesters' right to launch a giant balloon depicting U.S. President Donald Trump as an angry baby during his July visit to Britain.
Organizer Yanny Bruere said Saturday's protest was set up "in retaliation" for the Trump blimp.
"I think a certain amount of respect should be afforded to the leader of the free world and the greatest ally the U.K. has," he said.
Khan, London's first Muslim mayor, has been repeatedly criticized by Trump for his handling of security and crime in the British capital.
The bikini is a reference to an advertisement Khan banned from the city's transport network that showed a young woman in a skimpy yellow bikini asking, "Are you beach body ready?"
He said the weight loss ad was demeaning, but opponents argued banning it was an attack on free speech.