The garment, aimed at children aged three months to three years old, was available to buy in the UK, Israel, Germany, France, Albania and Sweden.
The controversial item has now been withdrawn by the retailer and is no longer available at their stores or online.
A spokesperson for Zara said: "The garment was inspired by the classic Western films, but we now recognise that the design could be see seen as insensitive and apologise sincerely for any offence caused."
The retailer also took the to their Twitter feed to express apologies over the mishap in a variety of languages.
Zara experienced a similar gaffe back in 2007 when it withdrew a handbag from stores after a customer brought attention to the fact the design featured swastikas.