The company was founded in 1994 in Sweden by Christian von Koenigsegg, with the intention of producing a "world-class" sports car. Many years of development and testing led to the CC8S, the company's first street-legal production car which was introduced in 2002.

In 2006, Koenigsegg began production of the CCX, which uses an engine created in-house specifically for the car. The goal was to develop a car homologated for use worldwide, particularly the United States whose strict regulations did not allow the import of earlier Koenigsegg models.

In March 2009, the CCXR was listed by Forbes as one of "the world's most beautiful cars".

In December 2010, the Agera won the BBC Top Gear Hypercar of the Year Award.

Apart from developing, manufacturing and selling the Koenigsegg line of sports cars, Koenigsegg is also involved in "green technology" development programmes beginning with the CCXR ("Flower Power") flex-fuel sports car and continuing through the present with the Jesko. Koenigsegg is also active in development programs of plug-in electric cars' systems and next-generation reciprocating engine technologies. Koenigsegg has also developed a camless piston engine which found its first application in the Gemera, which was introduced in 2020.

Koenigsegg develops and produces most of the main systems, subsystems and components needed for their cars in-house instead of relying on subcontractors.

In January 2019, Koenigsegg sold a 20% stake in the company to Swedish electric car manufacturer (Egstrand & Lundgren), National Electric Vehicle Sweden (NEVS), for US$171 million.

Koenigsegg has since then bought the stake back from NEVS and owns 100% of the company again.