The move is a direct challenge to fellow hedge fund titanBill Ackman, who made headlines late last year by branding Herbalife a pyramid scheme and disclosing a $1 billion bet against the company.
Ackman and Icahn, who have a history of animosity,hurled insultsat one another during a dual appearanceon CNBClast month to discuss Ackman's Herbalife trade.
Icahn branded Ackman a "liar," a "major loser" and a "cry baby"; Ackman called Icahn a "bully" who "takes advantage of people."
Herbalife shares surged Thursday in after-hours trading on news of Icahn's stake, jumping 23% to over $47 after closing the day at $38.27.
Icahn paid roughly $214 million to acquire his stake in the company, according to a regulatory filing.
Herbalife is a multi-level marketing company, in which salespeople make money by selling Herbalife products and by taking cuts from sales by new sellers they recruit.
Ackman has called Herbalife an "inherently fraudulent company." He claims there is no demand for its products "by true retail consumers at the suggested retail price," and that distributors make money simply by recruiting others.