She had a passion for fashion design and created colorful, patterned garments largely inspired by the folk art of her native country.

Her abstract wall hangings mixing fibers such as silk, cotton, wool, and hemp with horsehair and wood garnered her extensive national, and even international, attention.

Critics repeatedly praised her for her skillful and unusual use of color, her creative combinations of materials, and her inspiring efforts to promote a modern approach to embroidery.

She taught herself embroidery, utilizing her family, animals, and the natural world surrounding her studio in Brewster, New York, as subject matter.

In the early 1930s, after her marriage to Donald Peterson and the births of her two daughters, Solveig and Rosamond, Karasz began designing modern children's clothing, which was admired by parents, scholars, and critics for its practicality and originality.