Swiss Peter Sauber wanted to be a racing driver and after messing about with a modified old Volkswagen Beetle he decided to build a prototype hillclimb car. He called it the Sauber C1 and at the wheel he won the 1970 Swiss hillclimb championship. Further hillcimb cars followed and then Sauber decided to branch out into sportscar racing. The C5 was a BMW-engined Group 6 car with which Herbert Muller won the Interserie in 1976. The following year the C5 was raced at Le Mans by Eugen Strahl and Peter Bernhard. The following year the team was back at Le Mans with Marc Surer driving but once again there was mechanical trouble.

As money was short for such activities, Sauber decided not to build a new prototype in 1979 and so prepared Lola Formula 3 cars for the Swiss Championship, his drivers Beat Blatter, Eddy Kobelt and Max Welti finishing 1-2-4 in the series. The relationship with Welti would be an important one for the team as he would become the team's sporting director for many years. After running cars in Group 4, Group 5 and the Procar Championship (his drivers included Hans-Joachim Stuck, Nelson Piquet, Dieter Quester and Marc Surer), Sauber decided to build a new sportscar for 1982 and commissioned composite company Seger & Hoffman to build the C6. It was not a success and Sauber went looking for a new engine for Group C racing. He decided that the five-liter Mercedes V8 would be a good engine and began development work. The following year Mike Thackwell and Henri Pescarolo won the Nurburgring 1000 in the Sauber-Mercedes. This led to the formation of a Mercedes-Benz Competition Department in 1988 and support for Sauber's efforts. The team won five races and Jean-Louis Schlesser finished runner-up in the World Sportscar Championship. As a result Sauber's cars became official Mercedes-Benz entries in 1989. The team dominated the World Championship winning seven of the eight rounds and scoring a 1-2 finish in the Le Mans 24 Hours. The 1990 season was another success with eight wins in nine races and another World Championship.

Sauber and Mercedes-Benz then began preparing for a Formula 1 program. In June 1991 Dr. Harvey Postlethwaite was hired to become technical director of Team Sauber Mercedes and started work on an F1 program. In December, however, Mercedes-Benz cancelled the project but quietly financed Sauber's efforts. The team used Ilmor engines but after encouraging results in 1992 the engines became known as Sauber V10s in 1993 and Mercedes V10s in 1994. The season was not a success with Karl Wendlinger being seriously injured in an accident at Monaco and the team failing to do as well as expected. When the opportunity arose for Mercedes to link up with McLaren, Sauber was left in the lurch. The team managed to do a deal for Ford factory engines for the 1995 and 1996 seasons. A majority shareholding in the team was acquired by Dietrich Mateschitz of the Red Bull drinks company and Fritz Kaiser joined as commercial director, taking a small shareholding in the operation as well. Kaiser then landed a major sponsorship deal with the Malaysian oil company Petronas and established an engineering company do begin work on the design of a Sauber Petronas V10 engine, hiring Osamu Goto to head the project. The team also announced that it had reached an agreement with Ferrari to supply the team with old engines until the Sauber Petronas V10 was ready. The deal began in 1997 but after the economic crisis in Asia in 1998 the engine program was suspended.

Kaiser and Sauber disagreed on the future direction of the team in the course of 1999 and when Mateschitz supported Sauber, Kaiser departed. Early in 2000, after more disappointments, Sauber dumped technical director Leo Ress and replaced him with Willi Rampf. The results in 2000 were disappointing and so Sauber took the risk of hiring youngsters Nick Heidfeld and Kimi Raikkonen for 2001. This was opposed by Red Bull boss Dietrich Mateschitz and in the autumn he decided to sell his shares in the team back to Sauber. These shares were later passed on to Credit Suisse. SauberÕs risk with Raikkonen paid off and the team finished fourth in the ConstructorsÕ Championship in 2001. Raikkonen went to McLaren but the money paid for his contract enabled Sauber to begin work on an impressive new windtunnel facility at Hinwil and the team hired another youngster Felipe Massa for 2002. He did a good job but at the end of the year Sauber had the chance to hire Frentzen again and so dropped Massa.

Massa returned in 2004 as team mate to Giancarlo Fisichella and the team installed the most powerful computers in F1. The new windtunnel went into operation but the relationship with Ferrari became increasingly strained and Peter Sauber began looking to BMW for engines in 2006. For his final year with Ferrari engines in 2005 Sauber picked Jacques Villeneuve to partner Massa and switched the team from Bridgestone to Michelin tyres.