While her then-husband, Gary Reynolds, was spending time overseas with their son Brock, Katherine had an affair with Gary's best friend, a local judge named Arthur Hendricks. Shortly before Gary returned, Katherine gave birth to Jill and handed her over to a friend from school named Charlotte Ramsey, with instructions to give her up for adoption. Unfortunately, Charlotte was unable to drop the baby off as planned, and was forced to give her own name as the child's birth mother.

Many years later, the woman Jill had always thought of as her mother, Liz Foster, discovered she had a brain tumor. Fearing that her time on Earth was limited, Elizabeth Foster decided to tell Jill that she was adopted. Elizabeth survived, but the secret left Jill reeling. After a long search, she discovered Charlotte Ramsey's name on her birth certificate.

Katherine was shocked when she saw Charlotte back in Genoa City a short time later, but still didn't piece together her connection with Jill. It wasn't until John Abbott, also a former schoolmate, recognized Charlotte that the truth started to come out. He eventually tricked Katherine into revealing that Charlotte had an abortion, which left her unable to carry children, when she was younger.

With the truth about to surface, Charlotte went to the Chancellor Estate and confronted Katherine on May 20, 2003:

Charlotte Ramsey: You had a child, remember?

Katherine Chancellor: Yes, I had a child. Brock is the light of my life.

Charlotte Ramsey: Hmm...Come on, Katherine, this is me. I was there; there was another child--

Katherine Chancellor: Charlotte, don't do this.

Charlotte Ramsey: Your marriage had been rocky. Gary Reynolds--oh what a man he was!

Katherine Chancellor: Don't you dare mention his name.

Charlotte Ramsey: The two of you needed some time off from each other. He went to Europe for a while year! Germany, wasn't it--some big project? He took little Brock with him--

Katherine Chancellor: I don't want to hear this!

Charlotte Ramsey: You were hurt...angry...and lonesome. You and I painted the town on a regular basis.

Katherine Chancellor: Stop!

Charlotte Ramsey: What's wrong with remembering the fun we had...when we were young? Oh, the men--the wonderful men! Well...one in your case. I couldn't get pregnant anymore, but you could...and you did!

Katherine Chancellor: I want you to leave!

Charlotte Ramsey: I have a reason, Katherine: It has to do with your child.

Katherine Chancellor: No, no, no. You were to put that baby into the hands of people who would see that it was adopted by a good family; then, you were to take off...somewhere...and find yourself a new life with the money I paid you; and, you were never...never...never to come back to Genoa City!

Charlotte Ramsey: You were so anxious for me to disappear.

Katherine Chancellor: And why not--you were a taker! I helped you at a difficult time...you almost died, but I was there. And later, when I needed you--oh, you were there for me, but with that hand extended, and you asked for money--

Charlotte Ramsey: I'd been disowned by my own family! I had no choice--

Katherine Chancellor: I had no choice but to pay you! I also thought I could get rid of you at the same time.

Charlotte Ramsey: And it worked, all these years.

Katherine Chancellor: Why are you back?

Charlotte Ramsey: Fate, I guess. Who knew that Jill would go looking for her birth mother?

Katherine Chancellor: Somehow you managed...to forge your signature on...that baby's birth certificate. But...how did you...how did you do that? You can't simply go rifle through records, and do whatever you want.

Charlotte Ramsey: That's my whole point, Katherine: This wasn't recent! I put my name on Jill's birth certificate the day after she was born!

Katherine Chancellor: You...what?

Charlotte Ramsey: I tried to just drop the baby off, but the people at the hospital wouldn't let me. Either I told them where I got the baby, or they were going to call the police! So, I said it was mine. They'd didn't really care; they just needed a name to write down.

Katherine Chancellor: You...you put your name on my baby's birth certificate?

Charlotte Ramsey: You didn't want yours on it, did you? Wasn't that the whole point--what you paid me for?

Katherine Chancellor: Are you telling me...my baby was Jill?

Charlotte Ramsey: Yes.

Katherine Chancellor: Oh, God...Oh, God...Jill?

 

 

 

Despite several obstacles along the way, the two former enemies have begun to form a true mother-daughter bond. Nevertheless, their feud was decades old, and it remains to be seen if Katherine and Jill can continue to be cordial--recent events have caused their deeply-rooted enmity for one another to resurface.

Katherine began to have disturbing nightmares involving a baby. She soon determined that they were actually fragments of a repressed memory. Eventually Katherine recalled that years ago--unable to accept the fact that Jill had given birth to a child with her deceased husband Phillip--she kidnapped the baby, and gave him to a woman named Violet Montgomery, whom she met in a bar. Violet was to place the child with a different family. The woman then gave Katherine a different baby that Jill raised as her son, Phillip Chancellor III.

While Jill adamantly refused to believe this at first, DNA testing of Phillip's remains confirmed that he was not Jill's biological son. It was then revealed that Jill's real son was, in fact, new-in-town Cane Ashby, who had recently married Amber Moore (Adrienne Frantz). Cane eventually ended his relationship with Amber, after he discovered that she had faked their wedding (with help from her friend Alison Stewart of As the World Turns).

Katherine, however, formed a bond with Amber after being trapped with her under the Clear Springs wreckage in October 2007. She sees a lot of herself in the young woman, and often offers her advice and a shoulder to lean on when others turn against her.

Katherine was again furious with Jill upon learning that her daughter was planning on eloping with Ji Min Kim. She offered Ji Min a bribe not to marry her daughter, but Ji Min declined. He was murdered before he could marry Jill and the investigation is still ongoing.

On January 25, 2008, Katherine collapsed while talking to Amber. She was then examined at her home by a physician and informed on January 30, 2008 that she had a mini-stroke. Following this terrifying experience, Katherine enlisted Amber's help in writing her memoirs--the prospect of which could be frightening to many Genoa City residents!

Maybe because they were brother and sister....