The company was established by Davor Hunski, Damir Perović, Roman Ribarić and Dean Sekulić, four former classmates, in late August 1992.

[2][3] Hunski and Ribarić were born and raised in the Utrina neighbourhood of Zagreb and initially met around age 6 at the "Mladost" primary school, which they attended for eight years.

[6] In late August 1992, while studying at separate universities, Hunski and Ribarić teamed up with Perović and Sekulić to found Croteam.

[2] Personal computers, such as the Amiga, were expensive at the time, wherefore the team acquired hardware from grey market, duty-free shops.

[7] The company initially operated out of Ribarić's apartment in Utrina and later rented an office in the building where Hunski resided with his mother.

[7] Other team members, such as Sekulić, worked from home and shared source code with the others by exchanging floppy disks.

[10] During this time, the Croteam staff was expanded with Admir Elezović, Alen Ladavac, Tomislav Pongrac, and Marko Sekulić.

In 2002, Serious Sam for the Xbox was released, which consisted of both games with the additional number of cinematics, an updated scores system, combos, multikills, auto-aiming and other console specific features.

In 2010, Croteam released high definition remakes of the original Serious Sam games with upgraded textures and models, enhanced engine, user interface and audio, and additional features.

[2] In December 2014, Croteam released the first-person puzzle game The Talos Principle for Microsoft Windows, macOS, and Linux.

[2] The division was later expanded into a business incubator programme providing teams with office space and technology, as well as occasionally financial support.

[24] In March 2018, it was formally announced as Croteam Incubator, at the time with six studios based in the same Zagreb office as part of the programme.

Ribarić acts as the division's president, Nikola Mosettig as vice-president, Damjan Mravunac as chief operating officer, and Zeno Žokalj as marketing and public relations manager.