Established in Japan in 1957, Kato Precision Railroad Models launched a U.S. division in 1986 and began distributing an N-scale version of the General Motors EMD GP38-2 locomotive in 1987. Prior to that date, Kato model trains were sold in the United States under the Con-Cor and Atlas labels. Since then, Kato USA has been the exclusive U.S. distributor for Kato's N and HO locomotives and rolling stock, as well as Unitrack straights, curves, and turnouts.

Especially sought by collectors are trains made by the company’s Kobo Custom Division. All Kobo trains are hand assembled in Japan, and many feature Digital Command Control, or DCC, capabilities; custom lighting effects; and weathering—from rust on the wheels to faux dirt on the tops of hoppers.

The first Kato trains made for Con-Cor were the N-scale Alco PA-1 and its companion, the cabless PB-1, both of which were released in 1967. This diesel engine is associated with ...the postwar locomotives that powered the Southern Pacific and Santa Fe railroads until the early 1950s. Kato’s relationship with Atlas was not as long-lived as the one it enjoyed with Con-Cor, but the introduction of the Kato-built Atlas Alco R-3 locomotive in 1983 was a milestone for Atlas and N-scale in general.