It was formed back in 1986 as Jam Software by Andy Gavin and Jason Rubin. In a publishing deal with Baudville, besides Ski Crazed for Apple II, they released Dream Zone in 1988, an adventure game that transforms your dreams into reality. Interface-wise it's vaguely similar to their next work, Keef the Thief, published in 1989 by Electronic Arts, and the title that launched the studio in the "big" gaming industry. In the same year the company changed its name to Naughty Dog.

From the second half of the 90s, Naughty Dog became know as the creator of several popular franchises focused exclusively on the Playstation line of platforms, like Crash Bandicoot, Jak & Daxter and the more recent action adventure series Uncharted. Subsidiary of Sony CE since 2001.