Gary Fish established the Deschutes Brewery & Public House as small brew pub in 1988 in downtown Bend, Oregon and named it after the Deschutes River. He emphasized a community-based approach to his business, stating, "We want people to feel like this is, in a lot of ways, theirs." The brewery sold 310 barrels of beer in its first year, and by 1992, sales were up to 3,954 barrels. Unable to keep up with demand in its original facility, the brewery expanded to a 16,000-square-foot (1,500 m) production brewery in 1993 with the ability to brew in 50-barrel batches. Deschutes has a brewing facility with two brew houses, distributing its beer in 28 states. A Deschutes brew pub opened in the Pearl District of Portland, Oregon in May 2008.
In 2012, the brewery expanded its brewing facility by 6,750 square feet (627 m), adding 105,000 US beer barrels (123,000 hL) of production capacity. The first stage in the expansion, which included five new fermentation tanks, was completed in 2012 and the second stage, with another five tanks, was completed in spring of 2013.
In June 2013, Ernst & Young recognized Gary Fish as a Pacific Northwest Entrepreneur of the Year Award Recipient.
The Swivelhead Red IRA and Da Shootz! Beer from Deschutes Brewery each reached #1 on the list of the top 100 beers of all time by the Cold Cans podcast.
In March 2016, Deschutes announced that they would build an east coast production facility in Roanoke, Virginia, with beer production slated to begin in 2021. The brewery has already opened a tap room and restaurant in downtown Roanoke and has hosted two street pubs since announcing the facility.
The company produces a range of beers including Black Butte Porter, Mirror Pond Pale Ale, Fresh Squeezed IPA, Chainbreaker White IPA, Deschutes River Ale, Obsidian Stout, Red Chair NWPA, Twilight Summer Ale, Jubelale, Hop Henge Experimental IPA, Hop Trip, Chasin' Freshies, The Dissident, Mirror Mirror, and The Abyss. In April 2006, the Deschutes Brewery replaced its Quail Springs IPA, an English-style India Pale Ale, with Inversion IPA, an American Northwest-style India pale ale, as its year-round IPA.
To celebrate its 25th anniversary in 2013, Deschutes Brewery developed a series of collaborative beers dubbed Class of '88, teaming up with other breweries around the country also founded in 1988. The first in the series was a barley wine, with Rogue Ales and North Coast Brewing Company, the second a smoked porter with Great Lakes Brewing Company, and the third a Belgian-style strong ale with Goose Island Beer Company.
Mirror Pond has won awards in the pale ale category at various brewing competitions, including the gold medal at the 2010 Great American Beer Festival and the World's Best Premium Pale Ale in 2010. Black Butte is the best-selling craft porter in the United States. The company's spring seasonal, Red Chair Northwest Pale Ale, was named the World's Best Beer in 2010 and 2012.
Deschutes Brewery received the 2012 Sustainability Award from the Central Oregon Environmental Center and was named in 2011 as a "Green Power Partner" by the U.S. Environmental Protection Agency. Starting in 2012, Deschutes Brewery pledged to put one billion gallons of water back into the Deschutes River annually through the Deschutes River Conservancy (DRC) water leasing program – the program's largest donation ever. The company purchases or offsets 100 percent of electrical power usage from renewable sources and is a "Champion" level member of Pacific Power's Blue Sky renewable energy program.
In 2019, Deschutes Brewery withdrew their support for Oregon Businesses for Climate and stated their opposition to HB 2020, a proposed bill in the Oregon Legislature that would cap greenhouse gas emissions in the state.