Nicholls (pictured) takes over from Toymaster's Roger Dyson, who has completed his two-year stint at the head of the trade body. She is also the first female to take the role since the body's creation more than 60 years ago.
She said: "I'm very honoured to be here and to take up the role of chairman of the association. I hope I can do it proud over the next two years.
"I'd like to say a very big thank you to Roger who has done a fantastic job over the last two years. He'll be a very hard act to follow."
The changeover took place at the BTHA's AGM at the Great Foster's Hotel in Egham, Surrey.
In addition, Vivid Imagination's MD Nick Austin took over from Robert Mann as chairman of industry charity, the Toy Trust.