Bonnaroo was established by Ashley Capps of AC Entertainment and Kerry Black (graphic design), Rick Farman (festival operations), Richard Goodstone (marketing), and Jonathan Mayers (programming) of Superfly Productions.
The first Bonnaroo Music Festival took place in 2002. The founders chose "bonnaroo" (Creole slang meaning a really good time) for its literal meaning and to honor the rich New Orleans music tradition they had enjoyed in college. Bonnaroo was popularized by New Orleans R&B singer Dr. John with his 1974 album Desitively Bonnaroo. Bonnaroo is derived from the French "bonne" /bɔn/ the feminine agreement of "bon" /bɔ̃/ meaning "good," and the French "rue" /ry/ meaning "street," translating roughly to "the best on the streets".
The founders were inspired by music festivals they attended in the 1990s, including those put on by the band Phish, and events held in Coachella and Glastonbury. They found a site in Manchester, Tennessee that had facilities and good highway access. Using only their website for ticket sales, they sold out the festival in about two weeks. By 2003, the festival had been named by Rolling Stone magazine as one of the 'top 50 moments in rock & roll.' Comedy acts such as Jim Breuer were first added in 2005. In 2007, Bonnaroo purchased the land for the festival, creating Great Stage Park with all of its iconic features. They installed a permanent main stage in 2010.
In 2016, AC entertainment was purchased by Live Nation Entertainment. Following the very weak attendance for the 2016 event, Live Nation responded with performances by U2, Lorde, The Weeknd, and the Red Hot Chili Peppers in 2017, returning the attendance to 65,000.