The company was established in November 1958 by puppeteers Jim and Jane Henson,[2] and is currently independently owned and operated by their children.

Subsequently, control of the company was assumed by Henson's children: Lisa, Cheryl, Brian, John, and Heather.

Henson sold The Muppets and Bear in the Big Blue House properties to Disney in 2004, but retains the remainder of its program library and assets.

Jim and Jane Henson officially founded Muppets, Inc. on November 20, 1958, three years after Sam and Friends debuted on WRC-TV in Washington, D.C. Aside from Sam and Friends, the majority of its work until 1969 was in advertising; appearances on late-night talk shows; and short "meeting films" primarily for enterprise use, produced from 1965 to 1996.

In 1968, the company began designing characters and producing short films for the fledgling Sesame Street, which premiered on NET (succeeded by PBS) in November 1969.

During this time, the show's host, Jimmy Dean, refused an opportunity to own 40% of the company, assuming that he did not attain that right.

[9] In the following years, Henson entered into deals with several companies, including television rights to the Henson library with Disney Channel and Nickelodeon; a record label with BMG Kidz; and a home media label with Buena Vista Home Video.

[10] In 1995, Henson entered into an agreement with ABC to produce primetime television series, leading to Muppets Tonight and Aliens in the Family.

[16] Disney,[17] Viacom,[18] HIT Entertainment,[19] AOL Time Warner,[20] Haim Saban,[21] Classic Media,[22] as well as Henson management, among others, were all parties reportedly interested in acquiring the company.

In December 2002, a deal was announced in which EM.TV would sell a 49.9% stake in Henson to an investment group led by Dean Valentine, a former executive at Disney and UPN.

On April 1, 2004, Henson and HIT Entertainment agreed to a five-year global distribution and production deal which included distribution of 440 hours of the company's remaining library including Fraggle Rock,[28] Emmet Otter's Jug-Band Christmas,[29] The Hoobs and Jim Henson's Mother Goose Stories.

to distribute thirteen series and specials from the Henson catalog on home entertainment and streaming platforms across all territories.

[37] A similar worldwide distribution agreement went into effect on January 5, 2024, for streaming, video on demand, broadcast, digital download, packaged media and certain non-theatrical rights for the films Labyrinth and The Dark Crystal, as well as behind the scenes specials Inside the Labyrinth and The World of the Dark Crystal.

[38] On June 20, 2024, the company announced they were planning to sell the Jim Henson Company Lot off La Brea Avenue in Hollywood, which it purchased in 1999, as “part of a much longer-term strategy to have The Jim Henson Company and our renowned Burbank-based Jim Henson’s Creature Shop under one roof, which is not feasible in Hollywood due to the space the Shop requires.”[39] In November of 2024, film producer McG and musician John Mayer bought the lot for $40 million.