Wilhelmine Walter founded the company in Lobositz, a small town in Bohemia in the Western part of the Czech Republic about 30 miles north of Prague in 1925. Wilhelmine originally began making soft toys for her children. The "Kersa" name began in 1933, derived from "Kunstlerisch Erzeugte Spielsatchen" meaning "artistically produced playthings".

Up until 1956, all toys had a small metal tag on their foot with the Kersa name. In 1948 Kersa moved to Mendelheim, Germany producing teddy bears, cats, dwarves and Easter Bunnies.

In 1960 Kersa ceased production of teddy bears and concentrated on production of cloth and wooden puppets. Today, Kersa Spielwaren-Atelier GmbH & Company KG is Germany's leading manufacturer of hand puppets.