Team flying disc games using pie tins and cake pan lids were part of Amherst College student culture for decades before plastic discs were available. A similar two-hand touch football-based game was played at Kenyon College in Ohio starting in 1942.

From 1965 or 1966 Jared Kass and fellow Amherst students Bob Fein, Richard Jacobson, Robert Marblestone, Steve Ward, Fred Hoxie, Gordon Murray, and others evolved a team frisbee game based on concepts from American football, basketball, and soccer. This game had some of the basics of modern ultimate including scoring by passing over a goal line, advancing the disc by passing, no travelling with the disc, and turnovers on interception or incomplete pass. Jared, an instructor and dorm advisor, taught this game to high school student Joel Silver during the summer of 1967 or 1968 at Mount Hermon Prep school summer camp.

Joel Silver, along with fellow students Jonny Hines, Buzzy Hellring, and others, developed ultimate beginning in 1968 at Columbia High School, Maplewood, New Jersey, USA (CHS). The first sanctioned game was played at CHS in 1968 between the student council and the student newspaper staff. Beginning the following year evening games were played in the glow of mercury-vapor lights on the school's student-designated parking lot. Initially players of ultimate frisbee (as it was known at the time) used a "Master" disc marketed by Wham-O, based on Fred Morrison's inspired "Pluto Platter" design. Hellring, Silver, and Hines developed the first and second edition of "Rules of Ultimate Frisbee". In 1970 CHS defeated Millburn High 43-10 in the first interscholastic ultimate game. CHS, Millburn, and three other New Jersey high schools made up the first conference of Ultimate teams beginning in 1971.

Alumni of that first league took the game to their colleges and universities. Rutgers defeated Princeton 29-27 in 1972 in the first intercollegiate game. This game was played exactly 103 years after the first intercollegiate American football game by the same teams at precisely the same site, which had been paved as a parking lot in the interim. Rutgers won both games by an identical margin.

Rutgers also won the first ultimate frisbee tournament in 1975, hosted by Yale, with 8 college teams participating. That summer ultimate was introduced at the Second World Frisbee Championships at the Rose Bowl. This event introduced ultimate on the west coast of the USA.

In 1975, ultimate was introduced at the Canadian Open Frisbee Championships in Toronto as a showcase event. Ultimate League play in Canada began in Toronto in 1979. The Toronto Ultimate Club is one of ultimate's oldest leagues.

In January 1977 Wham-O introduced the World Class "80 Mold" 165 gram frisbee. This disc quickly replaced the relatively light and flimsy Master frisbee with much improved stability and consistency of throws even in windy conditions. Throws like the flick and hammer were possible with greater control and accuracy with this sturdier disc. The 80 Mold was used in ultimate tournaments even after it was discontinued in 1983.

Discraft, founded in the late 1970s by Jim Kenner in London, Ontario, later moved the company from Canada to its present location in Wixom, Michigan.[12] Discraft introduced the Ultrastar 175 gram disc in 1981, with an updated mold in 1983. This disc was adopted as the standard for ultimate during the '80s, with Wham-O holdouts frustrated by the discontinuation of the 80 mold and plastic quality problems with discs made on the replacement 80e mold. Wham-O soon introduced a contending 175 gram disc, the U-Max, that also suffered from quality problems and was never widely popular for ultimate. In 1991 the Ultrastar was specified as the official disc for UPA tournament play and remains in wide use.

The popularity of the sport spread quickly, taking hold as a free-spirited alternative to traditional organized sports. In recent years college ultimate has attracted a greater number of traditional athletes, raising the level of competition and athleticism and providing a challenge to its laid back, free-spirited roots.