The Guild was formed from a nucleus drawn from two separate groups, the St George's Art Society, a group of architects who had seen service in the offices of Norman Shaw, including Ernest Newton, Mervyn Macartney, Reginald Barratt, Edwin Hardy, Lethaby and Edward Schroeder Prior, and the Fifteen, founded by the designer and writer Lewis Foreman Day and the illustrator and designer Walter Crane.

From 1889 Lethaby worked only part-time for Shaw and increasingly practiced independently, designing a wide range of products—books, furniture and stained glass as well as buildings—exploring the mystical symbolism of medieval and non-European design and architecture: themes he was to elaborate in his first and most famous (though arguably least representative) book Architecture, Mysticism, and Myth, published in 1891.

Lethaby finally left Shaw's practice in 1892 after the completion of his first major independent architectural project—the country estate of Avon Tyrrell in Hampshire, built for Lord Manners.

The next decade was Lethaby's most productive in terms of built works as his contacts in the Birmingham area, where the ideas of the arts and crafts movement were particularly well received, led to series of commissions for buildings in the Midlands or for Birmingham-based clients.

Lethaby believed that this was an artificial distinction and sought to have both taught as equally valuable parts of the process of producing a high quality end-product.

[5] This, coupled with his appointments as Principal of the Central School of Arts and Crafts in 1902 and as Surveyor of Westminster Abbey in 1906 meant that he was increasingly devoted to the academic study of the theory and history of architecture and design.