The Ragwitch by Garth Nix

From the author of Abhorsen comes classic fantasy set in a world dominated by the Ragwitch, a being of sinister, destructive intent.
An ancient spirit wreaks death and destruction on the world that sought to cripple her powers.
"Julia turned around -- and Paul skidded to a stop in shock. He felt like he'd been winded, struck so hard he couldn't breathe at all. For the person in front of him wasn't Julia at all, but a hideous mixture of girl and doll: half flesh, half cloth, and the eyes and face had nothing of Julia left at all, only the evil features of the doll."
When Julia finds the ugly doll in the strange ball of feathers on the beach, Paul instinctively knows that his sister has meddled with something that is going to cause trouble. But already it's too late -- the power behind the doll already has his sister in its thrall and, later that night, the Ragwitch claims Julia for its own.
Fighting against his natural urge to run from this hideous being, Paul is drawn into the creature's own world. Can he save his sister -- or even himself?