BSDI was founded by Rick Adams and members of the Computer Systems Research Group (CSRG) at the University of California, Berkeley, including Keith Bostic, Kirk McKusick, Mike Karels, Bill Jolitz and Donn Seeley.

[1] In December 1991, USENIX Secretary and Former Head of Software at Convex Computer, Rob Kolstad from University of Illinois, was hired and would take over company operations just two years later.

)[4] In late 1991, AT&T's Unix System Laboratories (USL) brought a lawsuit against BSDI, alleging that BSD/386 contained their proprietary trade secrets and source code.

[citation needed] In 1999, the BSDI employees sought an initial public offering and installed a new president to reach this goal as soon as possible given the recent success of the Red Hat IPO in the Linux market.

In 2000 the company merged with Walnut Creek CDROM, a distributor of freeware and open source software on CD-ROM and shortly after that acquired Telenet System Solutions, Inc., an Internet infrastructure server supplier.