Danelectro was founded in 1947 by Nathan Daniel. In the early years, they produced guitar amplifiers for Sears, Roebuck, and Co. and Montgomery Ward.

In 1954, they started producing the Silvertone and Danelectro lines of solidbody electric guitars, distinguished by Silvertones' maroon vinyl covering, Danelectros' light tweed covering, the concentric stacked tone/volume knobs used on the two-pickup models of both series, and the "lipstick-tube" pickups of both; these lines aimed to produce no-frills guitars of reasonably good tone at low cost.

In 1956, Danelectro introduced the six-string electric bass, which would be adopted by other companies such as Fender with the Fender VI, but never proved especially popular.

In 1966, Danelectro was sold to MCA. A year later, the Coral line was introduced, known for its hollow-bodies and electric sitars.

In 1969, the Danelectro plant was closed, due to MCA's attempt to market Danelectros to small guitar shops, rather than large department stores.

In the late 1990s, a new Danelectro plant opened, selling primarily reissues of old Silvertone and Danelectro guitars, newly designed effects pedals, and small amplifiers; this new company is considered by most of its patrons to carry on very well in the Danelectro tradition of good sound at low cost.