The history of the Underwood brand began in 1874, when John Underwood established a factory for the production of ink ribbon and copy paper. Among the partners of John Underwood & Co. was the then young and largest company Remington & Sons Co. which manufactured typewriters. The Remingtons soon began producing consumables at their factory themselves in order to become autonomous in the business, but this decision spawned a new competitor.

In response, John Underwood opened up production of his own typewriters. Underwood bought the company of inventor Franz Wagner, who had been involved in the design of the Caligraph, Yost, and Densmore typewriters. By that time Wagner had already developed and manufactured his own typewriter, named after himself. Soon the first two models of typewriters, the Underwood No. 1 and No. 2, rolled off the assembly line at the Wagner Typewriter Co. factory. In 1900, the former Wagner factory was renamed the Underwood Typewriter Co.