The theatre's name comes from Hermann Hesse's novel Steppenwolf, which original member Rick Argosh was reading during the company's inaugural production of Paul Zindel's play, And Miss Reardon Drinks a Little, in 1974.

The founders recruited six additional members: H. E. Baccus,[14] Nancy Evans, Moira Harris, John Malkovich, Laurie Metcalf, and Alan Wilder.

[17] In the summer of 1976, Steppenwolf took up residence in a vacant basement space of the Immaculate Conception Catholic Church[18] in Highland Park, Illinois and produced its first full season of plays.

[23] In 1996, after successful runs in Chicago and New York, Lyle Kessler's Orphans, directed by Gary Sinise, was the first Steppenwolf production to go international, debuting in London.

In 1988, Steppenwolf presented the world premiere of Frank Galati's adaptation of The Grapes of Wrath, based on the John Steinbeck novel, which eventually went on to win the Tony Award for Best Play.