They might be regarded as the King and Queen of cute character design, but as Garrick Webster discovers, Mike and Katie have a dark side too.

Chatting with Katie Tang and Mike Doney of TADO, one can quickly understand why they've proven to be such an effective creative force. They are on the same wavelength. Totally. It's more than just a case of finishing each other's sentences: they seem to jointly construct everything they do. If it were any other way, things probably wouldn't have worked because they are - all at once - a couple, a design business and an incredibly dynamic art duo.

Being together all the time must be tough. "It's not actually," begins Katie. Mike continues: "Everybody always says, 'I can't believe you can be around each other every single day.' We sort of squabble about work stuff, but no, it never really bothers us."

TADO's character design, illustration, online and animation work has made them famous around the world. The Sheffield-based studio have contributed to numerous magazine titles, including the one you're reading now. They've rubbed shoulders with art directors at some of the world's biggest ad agencies too, working for clients as big as MTV, McDonald's, Sainsbury's, Vodafone and the World Wildlife Fund. They're currently working on a secret project for a top British sports brand, and next month will release a new series with the global toy giant Kid Robot.

"They're bringing out the second series of the Fortune Pork Mini Plush, which were the first toys that we did in 2004. Kid Robot have picked it up, and it's a collection of 14 characters," says Katie. "It's different to some of our other stuff. This is aimed purely at kids and a fun audience," interjects Mike. "Yeah, this is a little more on the cute side," adds Katie, resuming their quick-fire banter. "I don't know though," points out Mike, "there are still bones and a bit of blood in there."

Some casual observers have dismissed TADO's work as being little more than simple, charming characters. There is, however, a dark undercurrent - particularly in their personal work. Lily the Littlest Cannibal, an exhibition staged last summer at the Magic Pony gallery in Toronto, is a case in point. While there's undeniably something delightful about Lily, the monster Tulip and their other friends, cannibalism is clearly no laughing matter. The story, conveyed via various paintings, giclee prints and wooden figures, takes place in a dark, gothic, Scandinavian forest. It's hardly a setting you would call 'cute'.

The exhibition was held to support the launch of their Cannibal Funfair figures by Kid Robot, but the pair wanted to do something a bit different. Taking a two- month hiatus from commercial work, Lily saw them collaborate with sculptor Mike Hunter, as well as an old lady called Gran Gran. The former carved Cannibal characters expertly from wooden blocks, while the latter crocheted unique (and slightly wonky) plush versions of them. For TADO, the exhibition was a creative reaction to constantly designing toys on a computer - work that Mike describes as "super, mega accurate" - with all the paintings done by hand too.

"The hand-painted nature suited the project more than anything really," begins Katie. Mike adds: "The whole thing was a fairly nostalgic look at childhood and the computerised stuff was just too perfect; too clinical. It simply didn't suit it. When we were kids, children's books were hand-drawn and hand-painted, and that's the effect we wanted to replicate, really."

A little bit of bite and a little bit of sauce are themes recurrent in TADO's non-commercial work. As Katie points out, they once had a phase of putting fangs on everything they drew. Similarly, for a while they gave everything big breasts. It's no surprise to learn that from early on in their careers they've been influenced by off-beat comic books, metal music and punk. They'd spend afternoons lazing around in Forbidden Planet, soaking up characters like Squee from Johnny the Homicidal Maniac by Jhonen Vasquez. Roman Dirge's Lenore is also an influence.

Whenever they're invited to do an exhibition, TADO see it as an opportunity to extend the range of their work, try out different styles and explore different media. When Pictoplasma asked them to do a talk for the event last March, they declined - but they did offer to do an exhibition. The organisers said they could use an underground bar room, and the wheels in Mike and Katie's heads started turning, in unison, naturally. Private Pandas was born. "We came up with the idea of a panda gentlemen's club, given that we'd been offered this space that was a basement bar, underground. It had red velour wallpaper with goldleaf on it and..." starts Mike, "...it had big gentleman's leather seats!" Katie chips in. Mike concludes: "Yeah! Big porno couches everywhere. We thought, 'This is perfect.' And the whole idea came from Japan."

The installation was very much like a maid cafe or cosplay bar in Japan, where some after-hours behaviour considered seedy in the West isn't so taboo. The aesthetics of venues in Soho, London, influenced them too. TADO erected a dancing pole in the bar, made up a recipe for special panda cocktails, and put panda floor vinyls around the place. They also created giant panda heads for people to wear in the bar, to become a panda alter ego. To cap it off, they hired lingerie models to wear the panda heads, and did a photoshoot to produce cute and sexy images to hang on the walls. Some of these have become part of the permanent collection of an art gallery in New York.

"As soon as the girls put the heads on, it became something completely different," explains Mike. "You'd sort of find yourself looking into the eyes of a panda and thinking of it as a character, rather than a girl in a hat."

"And the way that the models were interacting with the head, with the posing as well - you kind of saw it as a panda," adds Katie. Mike sums it up: "Yeah, we got them to sort of use their hands as much as they could to interact with the facial expressions of the panda. It was something very different, and quite unusual for us. It was a really, really interesting learning curve."

Bizarre to some, events like Lily the Littlest Cannibal and Private Pandas help TADO gain exposure with different audiences. Fans of their cute work might be a bit confused by cannibalistic toddlers or sexy pandas, but it has won them attention from new crowds. Within those crowds are art directors and creative directors who are looking for versatility and style. And for TADO, that spells work.

Right now, the pair are working on a top secret project. A big, American client has hired them to design the characters and backgrounds for an online game, with numerous levels. The project is so big, says Mike, it's going to take nine months to complete. And when it's ready, it's going to land in the educational sector - so don't expect more sexy pandas.

"It's nice because it's a different audience to some of our other stuff," explains Mike. "It has to be quite PC because of the nature of the client, and being American they view our work slightly differently than perhaps a British audience would. I think some of our work is quite British in its humour, so we possibly have to be a little more literal with them."

Despite their deeply artistic streak, Mike and Katie are anything but precious when it comes to commercial projects. They had no qualms about working for McDonald's last summer. In collaboration with their friends at the animation company Red Star, they produced a 30-second ad for Irish TV, promoting the multi-coloured Coke glass giveaway that the fast food chain had running. The colours come together to form a rainbow in front of a TADO landscape.

Another job that has put their work in front of millions of people was their Sainsbury's cereal packaging. They created six different boxes, each with a print run of five million, for children's cereal flavours. "Originally they wanted it so that you could stack all six boxes next to each other and it would make a whole landscape picture, but that kind of went out the window towards the middle, didn't it?" says Katie.

"It was simply because Sainsbury's boxes have to be displayed next to the competitor's box really, so they couldn't be in a line together," Mike replies. "They had to go next to the Corn Flakes or whatever. We kind of lost that idea halfway through."

"It's nice to go to Sainsbury's and see your cereal boxes on the shelves, or your poster on a billboard or something," adds Katie. "It's exciting. It's something you can tell your mum about, and then your mum will go, 'Oooo that's really good'."

As for the future, neither Mike nor Katie rave about any grand ambitions. TADO are happy just continuing to do their thing. They took a break in Japan last year, which clearly sparked their creativity, and they'd like to make a return visit. Another aim is to do more animation, and to become more independent in terms of how they produce some of their output. This means learning some 3D software, because at the moment they turn to friends when they want to create characters in 3D. "We've actually been trying to teach ourselves Cinema 4D, which is like trying to teach yourself Chinese. That's something we'd really like to do," says Mike. Katie continues: "We've got so many ideas and we're picky, and we always want to do a little bit more." Mike finishes the thought: "Yeah, the pair of us are control freaks when it comes to our own work."