Tatsumi Ryu was founded by Tatsumi Sankyo, who was born in what is now Ehime Prefecture in Shikoku. He is said to have been active as a bushi during the Eisho period ( 1504-1520). Tatsumi Ryu tradition has it that as a young man Sankyo secluded himself in prayer to the kami (deity) Tsumayama Dai Myojin, from whom he gained enlightenment in the sword arts.

Two techniques, Muko and Marui, form the foundation of the tojutsu (sword art including both iai/batto and kenjutsu). These are the integrating principles of this sogo bujutsu. Tatsumi Ryu's distinctive techniques of drawing and cutting with the sword appear to be unique to this tradition.

During the Edo period, the ryu was widely practiced among the bushi of the Hotta domain centered on present day Sakura City in Chiba Prefecture and the Okudaira domain in Kyushu. Currently only the Sakura line survives. The well known Meiji period educator, Fukuzawa Yukichi, founder of Keio University, is thought to have been one of the last exponents of the Tatsumi Shin ryu of the Okudaira domain.

At the time of the Meiji Restoration, a number of well known swordsmen were members of the Tatsumi ryu. In particular was Henmi Sosuke, the first head of the kenjutsu training unit of the post-feudal Tokyo Metropolitan Police Department. Yamaoka Tesshu, famous as a swordsman and calligrapher himself, said of Henmi Sosuke, “Swordsman are many, but only Henmi uses the true sword.”

During that time period, several of the basic kata of the Tatsumi Ryu kenjutsu syllabus, the iai syllabus, and the yawara were adopted by the Metropolitan Police Office.

In more recent times, Tatsumi Ryu, the current headmaster, Kato Takashi (who is also President of the Nihon Kobudo Shinkokai), and his designated successor, Kato Hiroshi, have all been declared Intangible Cultural Assets by Chiba Prefecture.