Following the lead of Victorian social reformers such as William Morris and John Ruskin, Mary Watts established the Compton Potters' Arts Guild in 1898 to promote traditional crafts among the local community.

Their products were sold through fashionable retailers such as Liberty and are still familiar and popular today.

Once Watts Chapel had been consecrated in 1898, Mary Watts began a new regular evening class at Limnerslease with the intention of making the interior decoration of the Chapel. But her local collaborators had become so enthusiastic about their work in terracotta that Mary felt ready to develop, in addition, a fully-fledged pottery business on the back of the Chapel project. The plan soon adopted was to emphasise decorative, artistic pieces, subsidised by more lucrative commissions for gravestones and sundials.

The bottle-shaped wood-fired kiln, designed by William De Morgan, that had been constructed in the grounds of Limnerslease was set working again. Memorials for the Watts Cemetery were soon in production, as were the sundials, still to be found in gardens across southern England. By 1901, Mary had recruited a full-time pottery manager, James Nicol. A site across Down Lane from Limnerslease was acquired for the Pottery Building where in due course a larger kiln was constructed.

By 1904, when Watts Gallery opened with accommodation for the pottery apprentices, the establishment became the Compton Potters' Arts Guild.

Compton Pottery was known for its locally sourced terracotta, although later it made more dainty objects in lighter commercial clay. Most distinctive of all are the chunky garden pots. These were typically press-moulded (the red clay was shaped by being pressed into plaster moulds), but some were thrown on the potter's wheel with the decoration added separately.

Finished pots were laid out for sale outside the pottery, next to the horse-turned pug-mill used to prepare the raw clay for working. The pots were also sold through other outlets, most notably Liberty of London, where Mary was named as their designer – against the famous store's regular policy of marketing only under their own brand name. Liberty also sold an elegant brooch based on one of Mary's key Chapel motifs and exhibited the Celtic-patterned Pelican rug which she designed.

Watts Chapel itself, and the surrounding Watts Cemetery, form the most complete tribute to Mary's work as a designer and artistic collaborator. There are some sixty Compton Pottery terracotta gravestones in the Cemetery.

In 1906, Mary added a decorative well-head at the Cemetery, and in 1911 completed the elegant brick Cloister next to her husband's grave. The Cloister was gradually filled with plaques commemorating local people. Near the lower gates of the Cemetery is a memorial to George Frederic Watts. It is in an Italian style, as many of George's friends knew him as 'Signor'. This was designed by Mary and includes relief interpretations of two of Watts's paintings and an effigy of the artist himself made by Thomas Wren. At the feet of the figure is a cherub holding a scroll on which appear the Latin words Finis et Initium: The End but also the Beginning.