Walsh has brought the creative team she was in charge of at Sagmeister & Walsh with her to the new company, which will be based in the same building in New York's Flat Iron area.
Walsh and Sagmeister will continue to work together on art projects under the Sagmeister & Walsh name, but Sagmeister will not be involved with any &Walsh projects.
"Huge, life changing news! Today I launch my new creative agency &Walsh," Walsh wrote on Instagram alongside a picture of her dressed in white against a grey desert backdrop with orbs, rocks and red smoke.
Walsh also used Instagram to reveal the visual identity of the new company, which features a cursive ampersand, as well as an &Walsh branding case study including campaigns for Israeli cloud-based web development platform Wix and American fashion brand Milly.
The new company joins a very short list of creative agencies around the world that are led by women.
To coincide with the launch, Walsh published an article addressing the gender imbalance in her industry on the new company's website.
"Today, as I launch my creative agency &Walsh, I am overwhelmed with emotion: elation that this is finally happening, exhaustion from the non-stop work that brought me to this point and an anxious excitement about what's next," she wrote.
"I'm also overwhelmed with gratitude for this privileged position I've found myself in. Very few women make it to creative leadership positions and even fewer have founded their own creative agencies."
She added: "The numbers say it all: 70 per cent of design students are women, but only five to 11 per cent of creative director positions are held by women. Only 0.1% of creative agencies are women-owned. POINT. ONE. PERCENT. How does this make any sense when women drive about 80% of consumer purchasing?"
In a separate blog post, Walsh revealed that it was always her ambition to own her own company.
"Since I was very young, it has always been my dream to have my own studio that was entirely my own," she wrote. "It was my intention 10 years ago to start my own company before I met Stefan."
However, she said it was a difficult decision to make, as everything was "going just fine" at Sagmeister & Walsh.
"Have you ever felt a deep voice inside telling you that it was time for a change, but you didn't know why?," she wrote.
"In my past when I had a strong gut instinct like this, I followed it without question. This was the first time I felt insecure. Why ruin something that was going well when nothing was wrong?"
Walsh has worked with Austrian graphic designer Sagmeister for almost a decade. She joined his team in 2010, and in 2012 she became a partner at the firm at the age of 25.
According to Walsh, Sagmeister had already started to step away from commercial projects, leaving her to run them on her own, which prompted her to make the leap and set up her own company.
"In the last 4 years, Stefan moved away from the client work, and I ran the client projects and business operations," she said.
According to Walsh, her ambition for the new company is not only to be financially successful, but also work to build a better work environment than existed at the old firm.
"As part of this move, I am determined to make &Walsh not only known for producing top-quality creative and strategy work for top clients, but to be one of the best places to work in terms of agency culture," she said.
Born in New York and raised in Connecticut, Walsh studied graphic design at the Rhode Island School of Design (RISD) and teaches design and typography at the School of Visual Arts in New York.
Other work by her includes the rebranding of the Jewish Museum in New York, a fashion campaign with a flashing model and an animated graphic for cloud software management brand Fugue.
Photography is by &Walsh.