It was founded in 1981 by Matthew Carter, Mike Parker, Cherie Cone, and Rob Friedman, all former employees of the Mergenthaler Linotype Company.

The Bitstream font collection is most widely used through its inclusion with the CorelDRAW software, as well as other Corel products such as WordPerfect Office.

The company received extensive criticism for its strategy of cheaply offering digitisations of pre-existing typefaces that it had not designed.

While technically not illegal, font designer John Hudson would describe its selling of large numbers of typefaces on CD at discount prices as "one of the worst instances of piracy in the history of type".

In addition, Sampo Kaasila, its founder and president and the creator of TrueType, agreed to join Bitstream's team as Director of Research and Development.