TeamLab was founded in 1998 by Toshiyuki Inoko and Shunsuke Aoki while they were studying at the Faculty of Engineering, University of Tokyo, along with three of their friends with engineering backgrounds. The group was officially incorporated when Inoko graduated from the university in March 2001.

TeamLab initially made little profit, but began to grow its reach through the creation of websites and smartphone applications, as well as office and store designs for outside corporations.

In 2011, artist Takashi Murakami invited the collective to make its debut at the Singapore Biennale. In 2014, the New York PACE Gallery began to help promote TeamLab’s work. TeamLab organized its own exhibition in Tokyo in 2015.

In 2020, TeamLab has sued MODS (Museum of Dream Space) for allegedly imitating its artwork and violating its copyrights. They have been fighting a legal battle for two years.