It was at the Hyperion Studio, after the loss of Oswald, that Walt had to come up with a new character, and that character was Mickey Mouse. With his chief animator, Ub Iwerks, Walt designed the famous mouse and gave him a personality that endeared him to all. Ub animated two Mickey Mouse cartoons, but Walt was unable to sell them because they were silent films, and sound was revolutionizing the movie industry. So, they made a third Mickey Mouse cartoon, this time with fully synchronized sound, and Steamboat Willie opened to rave reviews at the Colony Theater in New York November 18, 1928. A cartoon star, Mickey Mouse, was born. The new character was immediately popular, and, a lengthy series of Mickey Mouse cartoons followed.

Not one to rest on his laurels, Walt Disney soon produced another series—the Silly Symphonies—to go with the Mickey series. It featured different casts of characters in each film and enabled animators to experiment with stories that relied less on the gags and quick humor of the Mickey cartoons and more on mood, emotion, and musical themes. Eventually the Silly Symphonies turned into the training ground for all Disney artists as they prepared for the advent of animated feature films. Flowers and Trees, a Silly Symphony and the first full-color cartoon, won the Academy Award^® for Best Cartoon for 1932, the first year that the Academy offered such a category. For the rest of that decade, a Disney cartoon won the Oscar^® every year.

While the cartoons were gaining popularity in movie houses, the Disney staff found that merchandising the characters was an additional source of revenue. A man in New York offered Walt $300 for the license to put Mickey Mouse on some pencil tablets he was manufacturing. Walt Disney needed the $300, so he said okay. That was the start of Disney merchandising. Soon there were Mickey Mouse dolls, dishes, toothbrushes, radios, figurines—almost everything you could think of bore Mickey’s likeness. The year 1930 was a big one for the mouse that started it all, as it saw the first Mickey Mouse book and newspaper comic strip published.