Launching the party in Sydney, founder Diaa Mohamed told Fairfax he wanted a louder voice for Muslims.
"There are a lot of parties out there to specifically oppose Islam and Muslims, yet Muslims don't have any official representation," he said.
Australia has a number of anti-Islam parties, including one backed by Dutch MP Geert Wilders.
Australia is not short of political parties. From today you can add another to the list: the Australian Muslim Party.
But its chances of winning a senate seat are slim. Even in the parliamentary constituency with the highest proportion of Muslims, just over 20% of people follow the Islamic faith.
"Anyone can set up a political party," ABC's political analyst Antony Green told me.
"It doesn't mean you're going to get elected and it's far from clear how much community support he (Mr Mohammed) has."
Read more from Jon Donnison: Australian Muslim Party's tough road to representation
Mr Mohamed, a 34-year-old businessman, also defended launching the party immediately after terror attacks in Paris this week.
"There are going to be a lot of questions raised in the coming days of the events recently, and this is the whole reason we created this party," he told the ABC's AM program.
"So it is as good a time as any to launch it."
Mr Mohamed condemned the attacks in Paris and said Islam strictly forbade the killing of innocent people.
But he said his party would never support the invasion of a Muslim country in response to an incident such as the attacks in Paris.
"Let's look at how well that's worked in the past. We've invaded Afghanistan â€¦ we've invaded Iraq, and we're in the mess we're in right now," he said.
"So would I support something that's never worked in the past? No."

Scientists have been getting up close and personal with white rhinos' dung heaps in South Africa, and found that they were leaving messages for other rhinos.
It works because the different animals leave different chemicals in their poo, which other rhinos can smell to get clues about the rhino it came from.
From those chemicals, you can work out the rhinos age, gender, whether it's looking for more territory, or is ready to mate.
That's really important, because it means all the rhinos in the group know what's going on with each other so it's less likely they will fight.
Researchers even got involved, by making fake poo pretending to be different rhinos.
They found that dominant male rhinos acted different depending on which poo they were copying.
For example, they were most interested in the fake poo which had the same chemicals as a female rhino that was ready to mate. The male sniffed it for longer, and came back to the same spot more.
It's not unusual for animals to communicate through smells - that's why dogs often sniff around lamp-posts where other dogs have weed before.
But rhinos are different because they use poo instead, and they leave it in the same place for all the other rhinos in their group to smell - like leaving messages on social media.
Australia's first party representing Muslims intends to contest senate seats at the next federal election.
[NEXT_CONCEPT]
A new study says that rhinos have a smelly way to keep up with the gossip - leaving messages in poo.