During this timeframe, in Germany, an expert seamstress of children's clothes began a business making soft toys; her name was Margarete Steiff. Initially the Steiff business was not successful; however after the 26th President of the United States, Theodore (Teddy) Roosevelt, inadvertently gave the bear toys the name "Teddy Bear", all of this changed. In November 1902, Teddy Roosevelt attended a bear hunt. He was unlucky on the hunt and his only chance of a bear kill, was a bear the hunt's organizers had caught and tied to a tree. He refused. The following day, Clifford Berryman, a political cartoonist illustrated the incident, in the Washington Post, in the cartoon "Drawing the Line in Mississippi" and the little bear from the cartoon became synonymous of the president (see cartoon below). A year later that little cartoon bear was made into a toy by the Ideal Toy Company - the first Teddy Bear! After this time Steiff bears became hugely successful and in 1905 Steiff trademarked their "Button in ear" symbol.

Between 1903 and 1908; the years known as Barenjahre (Bear Years) the number of teddy bears produced skyrocketed from 12,000 to 975,000 per year! During this period toy bears became universally known as teddy bears. These early bears had what is now called the "traditional look", made of mohair with a long snout, long arms and a humped back. As the years progressed the popularity of teddy bears understandably increased and new materials were used to make teddy bears, changing their look and feel.

The introduction of some now very popular bear characters aided in the teddy bear's popularity increase: Rupert Bear in 1920 and Winnie the Pooh in 1926. Rupert Bear started out as a cartoon and Winnie the Pooh, as a character in children's books.

The Second World War had a marked effect on teddy bears, as toy factories moved production over to essential war supplies. After the war the production of teddy bears remained low, due to the continued effects of the war. Then during the 1950s and 1960s new materials and new bear designs were developed. During this period Paddington Bear shot to fame, starting out as a character in children's books, and then becoming a TV star and now he is well known worldwide.

In the late 1970s and early 1980s Teddy Bear Artists began designing and handcrafting one of a kind teddy bears, initially in the USA and then soon after this art style spread internationally. These bears are made and designed for adult collectors; not meeting the modern safety standards for children's bears. Artists let their imaginations run wild and bears are made in all shapes & sizes and made out of all materials. Some artists, such as Nel Roos from the Netherlands, recycle materials to make bears; for example using old movie theatre seat materials. Many bears are now dressed in all manner of costumes, even sporting wings -pixie bears!

Currently, Arctophiles (teddy bear lovers) worldwide search for special bears, be they antique, handmade artist bears or modern manufactured bears. There are collectors' magazines, teddy bear shows, websites, such as www.sarahbears.com and forums, such as Teddy Talk. The most expensive new teddy bear made is the Jubilee Bear made by Steiff to celebrate its 125th anniversary in 2005. It has a mouth made of solid gold, fur made from gold thread and eyes with pupils of sapphire and irises made of 20 tiny diamonds. This bear costs £43,000 ($82,624) and there were only 125 made. Teddy Girl was the most expensive antique teddy bear sold at auction; she was sold at Christie's UK for a total of £110,000 ($211,363). She is a Steiff cinnamon, centre seam teddy bear with thick curly mohair, circa 1904.