Hawzah News Agency(USA)-Minnesota Representative-elect Ilhan Omar said the cabbie threatened to remove her hijab during a confrontation on Tuesday.
The 34-year-old said the incident occurred just after she attended policy training at the White House.
Ms Omar came to the US from a refugee camp in Kenya as a child.
She made history and national headlines last month when she defeated a Republican to gain a seat in Minnesota's state house of representatives.
"On my way to our hotel, I got in a cab and became subjected to the most hateful, derogatory, Islamophobic, sexist taunts and threats I have ever experienced," she wrote in a post on social media.
"The cabdriver called me ISIS and threatened to remove my hijab, I really wasn't sure how this encounter would end as I attempted to rush out of his cab and retrieve my belongings.
"I am still shaken by this incident and can't wrap my head around how bold being (sic) are becoming in displaying their hate toward Muslims.
"I pray for his humanity and for all those who harbor hate in their hearts."
Minnesota has the nation's largest Somali community - about 50,000, according to the US Census