The company was founded in July 1983 by Timothy S. Leatherman and Steve Berliner in order to market the former's idea of a capable, easily portable hand tool with multiple functions.

Leatherman was inspired to design a "Boy Scout knife with pliers" while he and his wife traveled Europe and the Middle East in 1975, often attempting to use a simple pocketknife to repair both their aged and repeatedly malfunctioning Italian Fiat 600 car (bought in Amsterdam for $300) and leaky hotel plumbing.

[4] After additional refinement, Leatherman's first product was introduced in 1983 as the Pocket Survival Tool (PST) and initially sold through Early Winters' and Cabela's mail-order catalogs.

[3] Leatherman sold nearly 30,000 tools in 1984, fueling additional product development, and rapid growth both in the company and manufacturing capacity.

[citation needed] As of February 2011[update], Leatherman produced 50 products sold in 82 countries, with U.S. market share estimated at 55 percent.