Founded in July 2000 by Tim Schafer shortly after his departure from LucasArts, Double Fine's first two games – Psychonauts and Brütal Legend – underperformed publishers' expectations despite critical praise.

The future of the company was assured when Schafer turned to several in-house prototypes built during a two-week period known as "Amnesia Fortnight" to expand as smaller titles, all of which were licensed through publishers and met with commercial success.

Double Fine has also been able to acquire rights to remaster some of the earlier LucasArts adventure games, including Grim Fandango, Day of the Tentacle, and Full Throttle.

Schafer, who had just finished producing the adventure game Grim Fandango, a title met with critical praise but was a commercial disappointment, saw others leaving LucasArts and was unsure of his own position there.

[3] Schafer started Double Fine with programmers David Dixon and Jonathan Menzies in what was once a clog shop in San Francisco.

After several months of working on the demo for what would become Psychonauts, a mixture of personnel from the Grim Fandango development team and other new employees were slowly added to begin production.

[10] On June 9, 2019, during Microsoft's press conference at E3 2019, it was announced that Double Fine had been acquired by the company and was becoming part of Xbox Game Studios.

[11] According to Schafer, through the acquisition, Double Fine will be able to retain its independent nature but will not have to struggle with finding publishers for its games, a problem it has had in its past.

[13] A month ahead of the release of Psychonauts 2, in July 2021, Schafer stated he was happy with Microsoft's handling of Double Fine; he called the acquisition a "limited integration" with Double Fine retaining all control on the creative elements while leaving the financial issues up to Microsoft to manage, and left the studio able to focus their creative skills on finishing the game without feeling any budgetary crunch.

[15] Double Fine's first completed project was Psychonauts, a multi-platform platform game following Raz (named after Double Fine's animator Razmig Mavlian),[16] a psychically-gifted boy who breaks into a summer camp for psychic children to try to become part of an elite group of psychic heroes called Psychonauts.

[17] Double Fine's second project was Brütal Legend, a hybrid real time strategy, action-adventure game following a heavy metal roadie named Eddie Riggs, whose name is derived from both Eddie the Head, the Iron Maiden mascot, and Derek Riggs, the artist who created the mascot.

Tim Schafer has credited the inspiration for the game to the lore, fantasy themes, and epic Norse mythology of heavy metal music found in both its lyrical content and its album art.

[18] Brütal Legend was published by Electronic Arts and was released in North America on October 13, 2009 for the PlayStation 3 and Xbox 360, and later for Microsoft Windows.

Activision, having acquired the rights to the title through its merger with Vivendi Games, decided to drop it and forced Schafer to locate another publisher.

[22] Upon completion of Brütal Legend, Double Fine started work on its sequel but was told to stop development shortly after as Electronic Arts decided against publishing it.

Schafer also looked at the success of smaller focused games like Geometry Wars on the various download services, realizing the potential market for similar titles.

[23] Two of these games, Costume Quest and Stacking, were picked up by THQ and released digitally on the Xbox Live and PlayStation Network storefronts.

[24] Iron Brigade was prototyped between 2008 and 2009 as Custodians Of The Clock, and was originally released as Trenched before the title was changed due to trademark issues.

[31] The first game created with Indie Fund backing was revealed on October 15, 2013 to be Spacebase DF-9, a fleshed out commercial version of one of the Amnesia Fortnight 2012 prototypes.

[33] Largely due to backlash from the abrupt end of development, Spacebase DF-9 has more negative user reviews on the Steam store than positive.

In addition, those that paid more than the average will get to vote on a concept idea for a prototype led by Pendleton Ward, the creator of Adventure Time.

The top pick, Pongball, was included in the Amnesia Fortnight 2017 prototype downloads, and the fans were mentored by Double Fine developers.

[50][51] Within 24 hours, Double Fine Adventure had raised more than a million dollars, becoming the most funded and most backed project ever on Kickstarter until it was surpassed by the Pebble watch in April 2012.

[62] In May 2012, it was revealed that The Cave was the title of an adventure and platform game developed by Ron Gilbert during his tenure at Double Fine.

Titled My Alien Buddy, it built on their experience on augmented reality that they gained while making Double Fine Happy Action Theater and Kinect Party for Microsoft.

[66] On November 21, 2014, Double Fine announced that due to a publishing deal falling through, that it was forced to cancel an unannounced project and let 12 staff go.

The idea of Double Fine providing more long-term assistance to these indies arose during this event, forming the basis for this program.

[72] The third title announced under this program was Mountain by David OReilly, a procedural terrarium that provides an ambient, minimalist, zen-like experience full of secrets and mysteries.

Schafer stated in September 2019 that the fate of Double Fine Presents is unclear, but that while they will likely end up stop publishing, they will still likely engage with the community through the Day of the Devs events to support other independent developers.

[78] Double Fine and iam8bit host an annual free festival, Day of the Devs, in San Francisco with food, drink, and playable demos of unreleased indie games since 2012.