The transverse polarization of $\Lambda$ and $\bar\Lambda$ hyperons produced in proton-proton collisions at a center-of-mass energy of 7 TeV is measured. The analysis uses 760 $\mu$b$^{-1}$ of minimum bias data collected by the ATLAS detector at the LHC in the year 2010. The measured transverse polarization averaged over Feynman $x_{\rm F}$ from $5\times 10^{-5}$ to 0.01 and transverse momentum $p_{\rm T}$ from 0.8 to 15 GeV is $-0.010 \pm 0.005({\rm stat}) \pm 0.004({\rm syst})$ for $\Lambda$ and $0.002 \pm 0.006({\rm stat}) \pm 0.004({\rm syst})$ for $\bar\Lambda$. It is also measured as a function of $x_{\rm F}$ and $p_{\rm T}$, but no significant dependence on these variables is observed. Prior to this measurement, the polarization was measured at fixed-target experiments with center-of-mass energies up to about 40 GeV. The ATLAS results are compatible with the extrapolation of a fit from previous measurements to the $x_{\rm F}$ range covered by this mesurement.