The predecessor of Sotheby's auction house was founded by the publisher, entrepreneur and bookseller Samuel Baker in 1744. The firm began by selling libraries of books, but evolved to deal in antiques, prints, coins and collectables too.

In 1761 Baker went into partnership with auctioneer George Leigh. The name Sotheby's comes from Leigh's nephew, John Sotheby, who inherited a share of the business when Baker died in 1787. Sotheby's would be a family business for the next 80 years.

John Wilkinson, the firm’s senior accountant, became a partner in 1842. With the death of the last member of the Sotheby family in 1861, Wilkinson became the head of the business. In 1864 Wilkinson promoted Edward Grose Hodge, and the company was re-named as Sotheby, Wilkinson and Hodge: the name it carried until 1924.

In 1917 Sotheby's moved from Wellington Street, off The Strand, to New Bond Street in London's Mayfair. This had the effect of placing the business in one of the centres of the art world, and the interwar period saw the focus of the business shift accordingly.

The postwar years saw Sotheby's become an international firm. An office was opened in New York in 1955, and Sotheby's bought a large American fine art auctioneers, Parke-Bernet in 1964. Further expansion saw Sotheby's trading in Hong Kong (1973), Russia (1988), India (1992), France (2001), and China (2012).

Sotheby's became a public limited company in 1977, only to become private again when the firm was bought by George Taubman in 1983. The company was again listed in 1988, but this time on the New York Stock Exchange.

In recent years Sotheby's has diversified into areas including financial services and wine retailing.