In Amsterdam, Tim and Chau bought an aging Fiat for about $300 and began driving. The car was cheap for a reason. Hoses leaked, wiring caused trouble, and roadside repairs became a regular part of the trip. The inexpensive hotels where they stayed provided their own assortment of problems, including plumbing fixtures that sometimes needed more attention than the rooms themselves. Tim carried a Scout-style pocketknife and found plenty of uses for it, but whenever he needed to grip, pinch, twist, or hold something firmly, the knife could only take him so far. What he repeatedly wanted was a pair of pliers that could travel as easily as the knife in his pocket. During the trip, he began sketching an idea for a compact tool that would combine the two.

When the couple returned to Portland in 1976, Leatherman decided to see whether that idea could become a real product. He initially thought the project might take a few months. He began working with cardboard and wood before moving into metal, learning machining techniques along the way with help from his brother-in-law. The work stretched from months into years. The basic challenge was not simply attaching pliers to a pocketknife. The pliers needed handles long enough to provide useful leverage, but those handles also had to fold into a package small enough to carry. At the same time, the handles provided space for screwdrivers, blades, files, openers, and other tools.

Leatherman eventually joined forces with Steve Berliner, a college friend whose family operated Simplicity Tool Company in the Portland area. Berliner persuaded his father to give the pair space in the machine shop, allowing them to manufacture the tool themselves. Their early thinking still leaned toward industrial customers, but a meeting with the Seattle mail-order company Early Winters helped redirect the project. The design was still too complicated and expensive, and Leatherman and Berliner began removing features and simplifying its manufacture. The wholesale cost was cut roughly in half, from about $40 to $20, and the elaborate concept gave way to a leaner tool built around straightforward folding pliers.

The original PST was compact, almost entirely stainless steel, and centered on a pair of pliers that disappeared between its handles when closed. Knife blades, screwdrivers, a file, awl, can and bottle opener, wire cutters, and a ruler gave it the variety of a traditional multipurpose pocketknife, but the pliers changed how the tool could be used. Instead of being primarily a cutting tool with a collection of secondary implements, the PST could grip hardware, bend wire, hold damaged parts, and handle the kinds of small mechanical problems Tim Leatherman had encountered on his travels. The format was copied, modified, and expanded throughout the industry over the following decades.

For its first several years, Leatherman remained remarkably close to that original idea. The company's second major model, the Mini-Tool, arrived in 1986 and experimented with making full-size pliers fit into a much smaller folded package. Meanwhile, demand for the PST continued climbing. Leatherman's manufacturing operation expanded repeatedly, and in 1992 the company moved into a larger Portland factory intended to provide years of room for growth. It did not. Within two years the factory had been doubled, and within another three it had grown again. In 1993, Leatherman sold more than one million tools in a single year for the first time.

Leatherman moved in the opposite direction in 1996 with the Micra. Instead of building another tool around pliers, engineer Ben Rivera developed a keychain-size design centered on spring-action scissors. Tim Leatherman initially questioned moving away from the pliers that had defined the company, but the Micra found an audience almost immediately and was backordered shortly after its introduction. Its success opened considerably more room for what a Leatherman could be. A multi-tool no longer had to follow the dimensions, layout, or even the primary implement of the PST.

At the same time, Leatherman continued filling the spaces between its existing products. The locking-pliers-based Crunch appeared in 1999. The Juice family followed in 2001, offering colorful, medium-size tools positioned between the Micra and larger Leatherman models. The Squirt series pushed pliers and other working tools back down toward keychain size. By the end of 2001, Leatherman had sold more than 20 million tools, employed roughly 450 people, and was generating annual sales of around $100 million. What had begun with one difficult-to-sell product had grown into a broad family of tools being distributed around the world.

The original PST finally left production in 2004 after a run of more than two decades. By then the ideas behind it had spread throughout Leatherman's lineup, and newer models offered features that could not have been packed easily into the original frame. The Wave was redesigned that year with stronger pliers and locking implements throughout, while the premium Charge series combined the newer architecture with upgraded materials and interchangeable bit drivers. The retirement of the PST didn't end the box-style Leatherman either. Designs such as the Kick, Fuse, Blast, Rebar, and later Bond continued using variations of the folding-handle layout that traced directly back to Tim Leatherman's early work.

The following decade brought increasingly specialized designs. Leatherman introduced the MUT in 2010 with tools intended for military firearm maintenance, followed by the one-hand-operable OHT and, in 2013, the Raptor folding trauma shears developed with input from military medics, firefighters, EMTs, and other first responders. The Signal, which was released in 2015, applied the same approach to outdoor use with a ferrocerium rod, emergency whistle, hammer, sharpener, and more conventional multi-tool implements. Instead of trying to make every model work for everyone, Leatherman was increasingly designing some tools around the jobs and equipment used by a particular group of people.

The company briefly expanded beyond tools and knives through its acquisition of German flashlight manufacturer Ledlenser in 2011. The two brands continued operating separately under the Leatherman Tool Group umbrella until Leatherman sold Ledlenser in 2018, returning the business to a tighter focus on its own tools and related products. During the same period, leadership inside Leatherman was changing. Ben Rivera, who had joined the company as an engineer and later helped create products including the Micra and Wave, became president and eventually succeeded Tim Leatherman as CEO. Tim remained chairman and continued to stay involved with the company he had founded.

In 2019, Leatherman introduced one of its largest departures from the traditional PST layout with the FREE platform. Magnets were incorporated into the locking and retention system, allowing implements to move with less friction while keeping them secure when closed. The internal tools were also arranged so they could be reached from the outside and manipulated with one hand. The first FREE P-series models arrived that spring, followed by additional tools and knives using the same system.

Leatherman returned to its prototype-building in 2022 with the launch of Leatherman Garage. Rather than treating every experimental design as something that needed to support full-scale production, the Leatherman Garage allowed the company's engineers to build small batches around new materials, mechanisms, manufacturing ideas, and occasionally abandoned concepts from Leatherman's past. Its first release even revived the name Mr. Crunch and brought back the secondary plier arrangement that had appeared in Tim Leatherman's original patent but had been removed before the PST reached production. Later Garage projects became a testing ground for ideas that could move into regular products.

That connection became especially clear during Leatherman's 40th anniversary in 2023. Garage Batch #005 combined the FREE architecture with premium materials and new construction in a limited run of 1,983 tools, matching the company's founding year. Elements of that project soon appeared in the ARC, which joined the permanent lineup later in 2023. The ARC combined the one-handed, magnetic FREE system with a MagnaCut primary knife blade and a broad selection of locking tools, placing materials commonly associated with premium folding knives into Leatherman's flagship multi-tool.