The Art Ensemble of Chicago grew directly out of the Association for the Advancement of Creative Musicians, the collective pianist Muhal Richard Abrams, drummer Steve McCall, pianist Jodie Christian and trumpeter Phil Cohran, a former member of Sun Ra's Arkestra, founded on Chicago's South Side in 1965. Saxophonist Roscoe Mitchell (born August 3, 1940, in Chicago) had already had one formative encounter with the coming free-jazz movement years earlier: while serving in the U.S. Army's Europe Band in Heidelberg, Germany, from 1958 to 1961, he played alongside a young Albert Ayler, whom Mitchell later described as having "the force of revelation," an experience that reshaped how he thought about the saxophone. Back in Chicago and enrolled at Woodrow Wilson Junior College on the G.I. Bill, Mitchell fell in with Joseph Jarman (born September 14, 1937, in Pine Bluff, Arkansas), trumpeter Lester Bowie (born October 11, 1941, in Frederick, Maryland, and raised in St. Louis, where his father was a high school band director), and bassist Malachi Favors (born August 22, 1927), all of them, like Mitchell, charter or early members of the AACM.

Bowie and Mitchell persuaded Delmark Records staffer Chuck Nessa to strike out on his own, and in 1967 Nessa Records issued its very first release, catalog number n-1, under Bowie's name rather than the group's, since Mitchell was still under contract to Delmark. Numbers 1 & 2, recorded across two sessions that August with Bowie, Mitchell, Favors and, on the second date, Jarman, is regarded as the first recorded documentation of the quartet that would become the Art Ensemble; the group's signature devices, episodic collective improvisation, sudden shifts in density, and a taste for kazoos and whistles alongside conventional horns, are already in place.

In June 1969 the quartet relocated to Paris as part of a wave of American free-jazz musicians drawn to a receptive European scene. A promoter's description of the group as "the Art Ensemble, from Chicago" stuck, and they adopted it as a permanent name. Over roughly two years there they recorded more than a dozen albums. People in Sorrow (Pathé, recorded July 7, 1969), a single continuous forty-minute performance, is often singled out as the strongest of the Paris records. A Jackson in Your House (recorded June 23, 1969) and Message to Our Folks (recorded August 12, 1969), both cut at Studio Saravah for the BYG Actuel label, are the best known of the group's output from that label's celebrated 1969 Paris recording campaign, which also produced records for saxophonist Archie Shepp; Shepp and the Art Ensemble shared the bill that October at the Actuel Festival in Amougies, Belgium, the event that had drawn much of BYG's roster to Paris in the first place. Drummer and percussionist Famoudou Don Moye, who had been touring Europe with Steve Lacy after leaving the Detroit Free Jazz Band, joined the group around this time (sources differ on whether it was 1969 or 1970), completing the five-piece lineup, Bowie, Mitchell, Jarman, Favors and Moye, that would stay unchanged for three decades.

The group returned to the United States in 1971 and settled back in Chicago, signing to Atlantic Records, which released Fanfare for the Warriors in 1974 (recorded that September at Paragon Studios), an album notable for a guest appearance by AACM co-founder and pianist Muhal Richard Abrams. Through the 1970s the group built the theatrical stage show that became inseparable from its identity: ceremonial face paint and robes, and a sprawling arsenal of "little instruments", bells, gongs, sirens, conch shells, bicycle horns, played alongside each member's principal horn or drum kit. Trumpeter Bowie coined the phrase that summed up the approach, "Great Black Music, Ancient to the Future," a motto the AACM itself later adopted more broadly.

In 1978 the group signed to Manfred Eicher's ECM label, debuting with Nice Guys (recorded May 1978, released 1979), followed by Full Force (1980), the acclaimed double live album Urban Bushmen (recorded in Munich in May 1980, released 1982), and The Third Decade (1985); the ECM years are widely regarded as the group's studio peak. In 1990 and 1991 the group recorded a pair of tribute albums for the Japanese DIW label: Dreaming of the Masters Suite, built from John Coltrane compositions including "Impressions," "Naima" and "Spiritual," and Thelonious Sphere Monk: Dreaming of the Masters Vol. 2, which brought pianist Cecil Taylor into the group as a featured guest for a program built around Monk's music.

Lester Bowie passed away from liver cancer on November 8, 1999, at his home in Brooklyn. Joseph Jarman had already stepped back from the group in 1993 to be ordained a Buddhist priest and run his aikido dojo in Brooklyn, so it was the surviving trio of Mitchell, Favors and Moye who recorded Tribute to Lester (ECM, recorded September 2001, released 2003) as a memorial. Jarman rejoined the group by January 2003, documented on the Rome-recorded Reunion and on The Meeting and Sirius Calling for Pi Recordings, but Malachi Favors died of pancreatic cancer on January 30, 2004, only weeks before the group, now with new bassist Jaribu Shahid and trumpeter Corey Wilkes making their recorded debuts, cut Non-Cognitive Aspects of the City: Live at Iridium (Pi Recordings, recorded that April), whose program includes a piece titled "Malachi" in his memory. Jarman gave his final performance with the group in October 2017 at Columbia University and passed away on January 9, 2019, at the Lillian Booth Actors Home in Englewood, New Jersey, leaving Mitchell and Moye as the group's two surviving founding members. The two have since continued to lead the Art Ensemble as an expanded large ensemble drawing on younger musicians from the AACM's later generations, releasing We Are on the Edge: A 50th Anniversary Celebration (Pi Recordings, 2019) and The Sixth Decade: From Paris to Paris (RogueArt, recorded live in February 2020 at the Sons d'Hiver festival near Paris, released 2023).

The Art Ensemble's own motto, "Great Black Music, Ancient to the Future," was not a description of a style so much as a refusal to rank one: the group treated field hollers, marches, blues, bebop, free improvisation and orchestral composition as equally available material, often within the same piece, and its concerts were built to move between all of them without warning. That range rested on real, documented listening and personal history rather than abstraction. Roscoe Mitchell's own account traces it to hearing Albert Ayler in an Army band in Heidelberg and to the "collective listening" he did afterward with Bowie, Jarman and Favors to Ornette Coleman, John Coltrane and Eric Dolphy; the group later made that lineage explicit on record with tribute albums built from Coltrane's compositions and a collaboration with Cecil Taylor. The AACM's own founding likewise crossed paths with an older generation of Chicago-rooted experimentalists: co-founder Phil Cohran had played trumpet in Sun Ra's Arkestra before helping start the AACM, carrying some of Sun Ra's self-produced, collectivist ethos into the organization from which the Art Ensemble emerged. Critics have consistently ranked the group among the most influential ensembles to come out of the AACM; the Penguin Guide to Jazz called Mitchell "one of the key figures" in the avant-garde, and the group's influence has reached listeners well beyond Chicago and well beyond its own era, including Israeli saxophonist Albert Beger, who names the Art Ensemble, alongside Ayler and Taylor, among the free-jazz recordings that shaped him during his early-1980s years at Berklee College of Music, an influence drawn from listening to their records as a student rather than any personal or recording relationship with the group.