The software development had its roots in the Virtual Grid Application Development Software project, at Rice University and other institutions from 2003 to 2008. Rich Wolski led a group at the University of California, Santa Barbara, and became the chief technical officer at the company headquartered in Goleta, California before returning to teach at UCSB.
Eucalyptus software was included in the Ubuntu 9.04 distribution in 2009. The company was formed in 2009 with $5.5 million in funding to commercialize the software.