In 1907 he had built his first gasoline-powered outboard motor, and two years later, Evinrude Motor Company was founded in Milwaukee. The simplest type of engine the company produced was a 2-stroke internal combustion engine that was powered by a mixture of gasoline and oil.

Evinrude reported that his invention was inspired by rowing a boat on Okauchee Lake, a small lake outside Milwaukee, Wisconsin, on a hot day to get ice cream for his girlfriend, Bess. By 1912, the firm employed 300 workers. Evinrude let two motorcycle-mad teens tinker in his Milwaukee-based machine shop; one was named Arthur Davidson, who went on to Harley-Davidson motorcycle fame, also based in Milwaukee. Ole Evinrude formed Evinrude Outboard Motors, which he sold in 1913 in order to look after his sick wife.

In 1919, Evinrude invented a more efficient and lighter two-cylinder motor. Having sold his part in Clemick & Evinrude, he founded ELTO or the Elto Outboard Motor Company. (ELTO was an acronym for "Evinrude Light Twin Outboard".) Although Elto faced stiff competition from other companies, such as the Johnson Motor Company of South Bend, Indiana, Evinrude's company survived through acquisitions, eventually forming the Outboard Marine Corporation.