It is a code fork of the original service, set up by ex-LiveJournal staff[1] Denise Paolucci and Mark Smith, born out of a desire for a new community based on open access, transparency, freedom and respect.

In response to criticisms of LiveJournal's friending system, Dreamwidth has split user relationships into two parts: subscriptions and access control.

[10] LiveJournal was initially free of advertisements, but gradually incorporated them, until by 2017 ads were shown to all non-paid readers on all pages.

[15][16] Unlike many other social networking sites using the LiveJournal codebase, such as InsaneJournal and DeadJournal, Dreamwidth is a code fork, removing unwanted features (such as advertising) and adding new ones as described above.

[17] A 2009 OSCON presentation saw Dreamwidth identified as highly unusual among open-source projects, for the number of women on its development team.

[20] Paolucci and Smith also spoke at linux.conf.au 2010 about Dreamwidth's development model[21] and have been invited to speak at Web 2.0 Expo[22] and OSCON[23] about their techniques.

[26] On 7 September 2010, Mark Smith announced that he had stepped back from Dreamwidth's front line[27] and moved to work for StumbleUpon.