Conceived and subsidized by San Francisco venture capitalist Warren Hellman, the festival has been held every year since the first event in 2001.

Various corporations have offered to sponsor the event over the years, but Hellman always turned them down, saying in an interview, "I want to keep it entirely free and noncommercial".

In an interview with Hellman, Ketch Secor of Old Crow Medicine Show said that part of what keeps the event focused on the music and the community is Warren's decision to ensure it is not "consumption driven" and the audience is not "bombarded with signage".

Nelson had worked for Bill Graham Presents, and introduced Hellman to booking agent and executive producer Dawn Holliday, and production manager Sheri Sternberg at a lunch.

In response to the Coronavirus disease 2019, the 2020 show switched from in-person to digital, streaming a series of prerecorded performances over the Internet.