Initially, the company was plagued by sluggish returns, which was in part attributed to the design and poor performance of the Volcanic cartridge: a hollow conical ball filled with black powder and sealed by a cork primer. Although the Volcanic's repeater design far outpaced the rival technology, the poor performance and reliability of the .25 and .32 caliber cartridges used in the pistol and rifle models respectively, was little match for the competitors' larger calibers.
Fortunately for Winchester, he inherited a brilliant engineer, Benjamin Tyler Henry, who would prove an invaluable asset. Henry sought to improve on the Volcanic repeating rifle, by enlarging the frame and magazine to accommodate seventeen of his newly redesigned, all-brass case, .44 caliber rimfire cartridges. This new cartridge put the new company on the map, and Henry's ingenuity was rewarded with a patent in his name October 16, 1860, for what was to become the famous Henry rifle.
The Henry Rifle was manufactured for almost six years with a total production of approximately 12,000 rifles, both iron and brass frame models. Following the success of the Henry rifle, the company was reorganized once more and renamed the Winchester Repeating Arms Company. In 1866, employee Nelson King's new improved patent remedied flaws in the Henry rifle by incorporating a loading gate on the side of the frame and integrating a round sealed magazine which was covered by a fore stock. The first Winchester rifle was the Model 1866, the Yellow boy.
Repeating rifles were used to some extent in the American Civil War. However, the United States Army at that time did not use many repeating rifles as it was a new, untested technology. Repeating rifles were not widely used until after the war, when they became increasingly popular with civilians. Military authorities concentrated primarily on perfecting breech-loading single shot rifles for many more years. With thousands of rifles in the hands of the average pioneer, the Winchester repeating rifles gained a reputation as "the gun that won the West".
When Winchester died on December 11, 1880, his ownership in the company passed to his son, William Wirt Winchester, who died of tuberculosis in March of the next year. William's wife Sarah believed the family was cursed by the spirits killed by the Winchester rifle, and moved to San Jose, California and began building a chaotic mansion now known as the Winchester Mystery House with her inheritance, intending to confuse the spirits seeking revenge.
In 2006, the Olin Corporation, owners of the Winchester name, closed their factory in New Haven amidst much protest, finally ending all Winchester ties with the city.