It was upon learning Aikido that Ohtsuka-sensei began to form a new budo, a Way of Harmony. He would eventually blend the basics of Funakoshi's karate, the practicality of Shindo Yoshin Ryu Jiu Jitsu, and the spirituality of Aikido, as well as the natural, evasive movements of the latter two.

Much like the Jiu Jitsu influence on Ohtsuka-meijin's budo, Aikido had more influence on the principles from which techniques are derived, rather than the specific techniques themselves. Also, it would appear that Shito ryu Karate and Shindo Yoshin Ryu Jiu Jitsu had a much heavier influence on Wado than Aikido.

Ohtsuka gradually incorporated knowledge from Jiu Jitsu, Aikido, and the other karate sensei he trained with, into the classes Funakoshi-sensei had put him in charge of. This included free fighting, and weaving his newfound principles into the kata. While many students agreed with the changes being made, Funakoshi-sensei viewed them as contrary to his teachings. Due to their disagreements, it was in 1930 that Ohtsuka-sensei and Funakoshi-sensei finally parted ways.

Over the 4 years that followed, with help from students who also left Funakoshi's instruction, Ohtsuka continued his own teaching. Constantly developing his new budo, he focused on deriving practical defense from formal art. A major breakthrough was the idea of Kihon Kumite Kata, which became his greatest contribution to martial arts. In blending Jiu Jitsu, Aikido, and Karate, he created not only 36 new kata, but a new budo.

Ohtsuka-sensei created the All Japan Karate-do Research Organization (Dai Nippon Karatedo Shinko Kai) in 1934, after encouragement from many of his students. Also, his son Jiro (later known as Hironori Ohtsuka II), who would later become Ohtsuka's heir, was born that same year.

Four years later, the All Japan Classical Martial Arts Festival (Dai Nippon Kobudo Tai Kai) invited Ohtsuka-sensei to demonstrate his controversial new style. He was asked to name the style prior to the demonstration, and he registered it as Shin
Shu Wado Ryu - New Style Way of Harmony School. The year after, when Dai Nippon Butokukai requested all Japanese martial arts and their chief instructors register their names, Ohtsuka-sensei gave the name Wado-Ryu - Way of Peace and Harmony.

Ohtsuka-sensei continued teaching, and Wado-Ryu eventually became one of the most highly regarded Japanese martial arts. The 1st All Japan Wado-Ryu Karate championships were held in 1955. In 1963, Mr. Arakawa, Mr. Takashima, and Mr. Tatsao Suzuki left Japan to help spread Wado-Ryu Karate to Europe and America. Emperor Hirohito in 1966 awarded Ohtsuka-sensei with The Grand Order of the Rising Sun (Kyuokujitsusho). In 1972, the president of International Martial Arts Federation (Kokusai Budo Renmei) awarded Ohtsuka the title of "meijin" (master), the first time a karateka had been given such an honor in Japan. Even now, many years after his death in 1982, people all over the world are still being affected in a positive way by Ohtsuka's Wado-Ryu Karate-do, which is his ultimate honor.