Duffy first appeared as "The Disney Bear" in 2002 as a marketing gimmick to promote the opening of the Once Upon a Toy store in Walt Disney World's Downtown Disney. This bear already had the Mickey-silhouetted face, plus Mickey marks on his feet and left hip. However, he had no name and a fairly market-centered backstory, in which Mickey's generic teddy bear is magically imprinted with Mickey's face and brought to life by Tinker Bell's pixie dust. The artwork features cameos by lots of characters who have nothing to do with the story. It should be noted, too, that the highly simplistic, graphic style used to draw the Disney Bear was replaced with a much softer, richer hand-drawn illustrative style for Duffy's Tokyo storybook.

These Disney Bears were released in a rainbow of colors - Valentine red, pink, green, blue, lavender, grey, black, white, chocolate, caramel, purple, and honey gold. However, they were never a hit. Having failed to really find their market, by 2004 most of them ended up at Disney outlet stores, long forgotten.

That same year, the Disney Bear launched at the Tokyo Disney Resort as part of that year's Christmas events on December 1st and was instantly popular. At Christmas of 2005, after just one year of successful sales of plush bears and just a smattering of seasonal costumes, the Oriental Land Company decided to fully invest in this teddy bear character the fans had taken such a liking to. They made the him an official part of the park and named him "Duffy," and created an all-new original story to introduce his background. OLC gave him a whole section of the park as a merchandising character. He would go on to "steal the stage" at the restaurant theater (Cape Cod Cook-off) from none other than Donald Duck, replacing "Donald Duck's Boat Builders" with "My Friend Duffy," a show inspired by - but not faithful to the story presented in The Bear of Happiness & Luck. TDS posted signs using the same artwork from the storybook to claim Cape Cod as "Duffy's Hometown." The story had all the hallmarks of Disney - mysterious magic, the power of love and friendship, the wonder of exploration and adventure...and it gave real context to the name, in that Duffy was a hand-made gift that Mickey kept in a duffel bag on his journeys.

In addition to grounding the character in both the parks and a fictional sense of place, the story also made it clear that Duffy was primarily about two things - photos and fashion. OLC put "Photo Points" around the park where guests could snap pictures of or with their Duffys. This was all in response to what fans did with Duffy during that first year. Duffy is a reflection of the fans every bit as much as a product of some marketing team - that collaboration was the "secret sauce" that finally made the concept work. Fans were taking tons of photos. Fans were building thriving cottage industry sewing and selling their own Duffy clothes. Fans were loving this little bear. Then, for the Tokyo Disney Resort 25th Anniversary events beginning in 2008, instead of just a few seasonal costumes, they created one new Cast Member costume every single month, which got people's attention. This was the year that really brought Duffy into the mainstream.