Diskoton was formally established in 1972 in Sarajevo at the instigation of Asim Haverić, then an employee of the record label Beograd Disk (later to become Jugodisk).

The label acquired its name through a public call advertized by a popular magazine Ven, opting to pick a name suggested by young musician Brano Likić, later the founder and leader of the band Rezonansa.

In the earliest months of operation, due to unskilled staff, a large quantity of PVC was wasted because the machines turned out defected records, which were then trashed.

Some of the artists that have been signed to Diskoton, include: Like other former Yugoslav labels, Diskoton also had a licence to release foreign titles for the Yugoslav market including notable international popular music stars such as: The Commodores, Marvin Gaye, Gonzalez, Roy Harper, John Holt, Diana Ross, Tavares, The Temptations, Stevie Wonder, and others.

Other major labels in the former Socialist Federal Republic of Yugoslavia were PGP-RTB and Jugodisk from Belgrade, Jugoton and Suzy from Zagreb, ZKP RTLJ from Ljubljana, Diskos from Aleksandrovac, and others.