Patagonia was founded in 1973 by Yvon Chouinard, an accomplished rock climber and renowned environmental activist. The company's roots are found within Chouinard's earlier venture, Chouinard Equipment, which made durable, functional climbing gear and was established in 1957. After noticing the environmental damage caused by traditional pitons (climbing spikes), Chouinard developed and popularised aluminium chocks that could be used without harming the rockface they were climbing on. This futuristic design was one which marked the beginning of his commitment to environmental responsibility.

In the early 1970s, Chouinard shifted his focus to clothing, launching Patagonia with a selection of durable, timeless outdoor apparel. The brand quickly gained a reputation for quality and innovation, introducing technical lines like the Patagonia Synchilla Fleece and Capilene Base Layers. Throughout the 1980s and 1990s, Patagonia expanded its product range while also becoming a leader in corporate environmental activism. The company pioneered initiatives such as using organic cotton, reducing water and energy usage, and donating a percentage of sales to environmental causes.

In 2011, Patagonia took its value a step further and launched the "Don't Buy This Jacket" campaign, encouraging consumers to think critically about consumption and the environmental impact of their purchases. The brand continues to innovate in both product design and ethical practices, remaining a model for companies to prioritise the planet.

In September 2022, Patagonia made global headlines when they made Earth their only shareholder. The previously family-owned company was put into the Patagonia Purpose Trust, with all excess profits from running a responsible company now going to the Holdfast Collective. The Holdfast Collective exists to fund the climate movement by supporting healthy lands, healthy waters and thriving communities. As of September 2024, the Holdfast Collective has given over $161m.