It was discovered in 1980, from ground-based observations, by Dan Pascu, P. Kenneth Seidelmann, William A. Baum, and Douglas G. Currie, and was provisionally designated S/1980 S 25 (the 25th satellite of Saturn discovered in 1980).

[10] In 1983 it was officially named after Calypso of Greek mythology.

[11] The moon Telesto resides in the other (leading) Lagrangian point of Tethys, 60 degrees in the other direction from Tethys.

Like many other small Saturnian moons and small asteroids, Calypso is irregularly shaped, has overlapping large craters, and appears to also have loose surface material capable of smoothing the craters' appearance.

[6] This very high albedo is the result of the sandblasting of particles from Saturn's E-ring, a faint ring composed of small, water-ice particles generated by Enceladus' south polar geysers.