The company was founded as the Willett Distilling Company in 1936.
John David Willett (born in 1841) had been the master distiller for the Moore, Willett & Frenke Distillery, which he had formed with his brother-in-law Thomas S. Moore of Bardstown, and a Mr. Frenke of Louisville. In 1876, Willett fell ill and sold his interest in the company. The resulting company became the Mattingly Moore Distillery. John David Willett would, however, live on for another 38 years after this transaction. He died in 1914. The Mattingly Moore Distillery would itself go forward to become an important part in the history of other significant bourbon brands, such as the Tom Moore bourbon brand and other brands of the Barton Brands distillery (sometimes known as the Tom Moore distillery).
Starting at the age of 15 with a five-year stint at the Mattingly Moore Distillery, his son A. Lambert Willett (born in 1883) picked up his father's profession. Lambert Willett then worked for the Max Selliger & Co. Distillery for twenty years – eventually becoming one-third owner and superintendent of the plant. A. L. "Thompson" Willett, Lambert's son (born in 1909), also joined him at the plant as assistant superintendent. Lambert Willett later purchased a farm and, together with his sons and especially led by Thompson Willett, founded the Willett Distilling Company on the site. Thompson and Lambert Willett used John David Willett's bourbon recipes as the basis of the whiskey that they would distill there and brand as Old Bardstown.
The construction of the Willett Distilling Company began in the Spring of 1936 (soon after the 1933 repeal of alcohol prohibition in the United States), and the company produced its first batch of 300 bushels (about 30 barrels) on March 17, 1937. Five years after founding the Willett Distilling Company, Lambert Willett left Max Selliger & Co. to pursue the family business full-time. Lambert Willett and at least four of his sons held substantial positions of responsibility at the company. Lambert Willett died in 1970.
A. L. "Thompson" Willett, the son of Lambert Willett, was the president of the company until 1984. At one time, he was also the president of the Kentucky Distillers Association, and he also held a number of other positions of prominence in the community. He was a member of the Nelson County Historical Society, where his interests included the early history of whiskey-making in Kentucky. Thompson Willett's legal name was actually the same as his fathers, but he became known as "Thompson", using the maiden surname of his mother (née Mary Catherine Thompson) to distinguish him from his father.
Thompson Willett's daughter Martha Harriet Willett and some other members of her generation of the family worked for the company as well, and in 1972 she married Even (pronounced Evan) G. Kulsveen of Hamar, Norway, who would later purchase the company.
During the 1970s energy crisis, the company switched from producing whiskey to producing ethanol for gasohol fuel. This strategy soon failed when fuel prices returned to lower levels, and the distilling facilities were completely shut down in the early 1980s.
Kulsveen purchased the company and the property on July 1, 1984, and renamed the company to Kentucky Bourbon Distillers (KBD), Ltd., registered distillery number DSP-KY-78. For some time, KBD continued to produce bourbon from the aging barrels that the Willett distillery had produced before they had stopped distilling. As time moved on, KBD increasingly began to purchase its bourbon from other distilleries and operate as an independent bottling company and to restock its barrel aging facilities with purchased barrels. Kulsveen and his wife continue to operate the facility to this day, and the next generation of the family, including their son E. A. "Drew" Kulsveen and his wife Janelle, their daughter K. M.-B. "Britt" Chavanne and her husband Hunter Chavanne, are also now involved in the company. Drew Kulsveen is the current Master Distiller and manages production, Janelle Kulsveen runs the gift shop and tasting room, Britt Chavanne runs day-to-day operations, and Hunter Chavanne covers sales and marketing.
After having dropped out of the Kentucky Distillers Association (KDA) for decades, the company rejoined in October, 2012. Also in October 2012, the KDA announced that it would expand its Kentucky Bourbon Trail program to include a new "Craft Tour" of seven artisan distilleries, including the Willett Distillery. In December, 2015, it was announced that the Willett distillery was promoted to a higher class of membership in the Distillers' Association, becoming its first member in a new class of membership called the "Proof" level.