The Frasier actor revealed that he became romantically involved with the British flight attendant shortly after meeting her in December 2009, eight months before Camille filed for divorce.
"We actually met in the air on a plane to England," Kelsey recalled during an appearance on Jimmy Kimmel Live. "It was very romantic, she was working on the plane.
"We went out for coffee several days later and had this magical night in the snow in London around Christmas time. It was two years ago."
Kelsey married Walsh in February 2011 just days after his divorce from the Real Housewives star was finalised.
Camille stated last month that she will continue to wear her wedding ring, explaining that it reminds her of a time when Kelsey still "loved" her.
The former couple met on a blind date in 1996 and married the following year.
Watch Kelsey Grammer discuss his fling with Kayte Walsh on Jimmy Kimmel live below: