The company was founded in 1923 in Pfaffenhausen, Germany as "Auto RUF" by Alois Ruf Sr. as a service garage and was eventually expanded to include a full-service gas station. Ruf began experimenting with vehicle designs of his own in the late 1940s, and in 1955 designed and built a tour bus, which he marketed around Germany. The positive response it received led to Ruf expanding his business again by starting his own separately owned bus company.

Alois Sr.'s involvement in the auto industry had a distinct effect on his son, Alois Ruf Jr., who became a sports car enthusiast and in 1960 began servicing and restoring Porsche automobiles out of his father's garage. In 1974 when Alois Sr. died, Alois Jr. took control of the business and quickly decided to do away with the bus company, service garage and gas station, switching the company over to being solely focused on work with Porsche vehicles. A year later in 1975, the first RUF tuned Porsches appeared for sale.

RUF debuted their first complete model in 1977, a tuned version of Porsche's 930 with a stroked 3.3 litre motor. This was followed in 1978 by RUF's first complete non-turbo Porsche, a naturally aspirated 911 with a stroked 3.2 litre motor producing 217 horsepower.

In the years since, the company has made a major mark on the automotive world by producing exceptionally powerful and exclusive Porsche based vehicles including the 1987 CTR, which set the record as the world's fastest production automobile at the time of its release and the later the CTR2 which was again recognized as one of the fastest road-legal vehicles available anywhere in the world.

In April 2007, RUF released the new CTR3 to celebrate the company's new plant in Bahrain and as a 20th anniversary celebration of the original CTR.