By walking along any of the 24 floor tiles at its entrance, visitors can turn on different lights in the shop's giant green window display.
Upstairs on the fourth floor, the shop's recycling hub, 27 additional tiles are lined up as a 'runway' which triggers a light display on the opposite wall.
In line with H&M's ethos, all materials used in the window displays have been recycled. The illuminated tiles were created by Pavegen, while other elements (including the interactive wall of light) were made by SFD.
H&M's shop windows also include a large-scale animation created by Projection Artworks, which utilises projection mapping technology.
As part of World Recycle Week (18-24 April), the brand aims to collect 1,000 tonnes of unwanted clothes via its ‘Garment Collecting Initiative’, which was launched in 2013. All of its flagship stores around the world, including London, are involved.
All donations will be sorted at its warehouses and either sold in second-hand stores or made into new garments.
Visitors who recycle their clothing at the store are given a token which can be inserted into the store's fourth-floor wall to change its colour to green. They will also receive two £5 vouchers when they spend more than £25 on their next shop.
Last night the flagship store also hosted a performance from hip-hop artist MIA, the face of its #WorldRecycleWeek campaign.
Anna Gedda, head of sustainability at H&M, said: "The planet's resources are limited. If we want to continue enjoying fashion, we have to find a way to make better use of the resources.
"H&M works for a sustainable fashion future which, among many things, means that we want to create a closed loop for fashion where old clothes can be turned into new ones without using additional materials. We still have more to do, but already today we make so-called closed-loop products from recycled denim fabric from the garments you hand in."
Laurence Kemball-Cook, CEO and founder of Pavegen, added: "Everyone’s come together to make this installation the best it can be, and with our future I see Pavegen tiles at the entrance of every store down Oxford Street; contributing with retailers to make the shopping experience more sustainable.
"The project with H&M marks a simple, non-disruptive change to everyday routine that can have a huge impact on communities around the world."
Last September H&M installed a giant collection box for unwanted clothes in Covent Garden to mark the first Fashion Recycling Week.