Horacio Pagani, an Argentinian who formerly managed Lamborghini's composite department, founded Pagani Composite Research in 1988. This new company worked with Lamborghini on numerous projects, including the restyling of the 25th Anniversary Countach, the P140 design concept, and the Diablo. In the late 1980s, Pagani began designing his own car, then referred to as the "C8 Project". Pagani planned to rename the C8 the "Fangio F1" to honor five-time Formula One champion Juan Manuel Fangio.

In 1991 Pagani established Modena Design to meet the increasing demand for his design, engineering, and prototyping services. In 1992, he began construction of a Fangio F1 prototype, and by 1993, the car was being tested at the Dallara wind tunnel with positive results. In 1994, Mercedes-Benz agreed to supply Pagani with V12 engines.

The final car was named the Zonda C12; the Fangio F1 name was dropped out of respect for Fangio, who died in 1995. It was first presented at the 1999 Geneva Motor Show.

In 2005, Pagani announced that it planned to triple its production output within the next three years, and to enter the US market in 2007.

On the 25th of September 2007 Pagani claimed a new record for production super cars using the Pagani Zonda F Clubsport by completing the Nürburgring in 7:27:82