The franchise was founded as the Fort Wayne Zollner Pistons, a National Basketball League (NBL) team, playing in the gym of North Side High School. Owner Fred Zollner's Zollner Corporation was a foundry, manufacturing pistons primarily for car, truck and locomotive engines. In 1948, the team became the Fort Wayne Pistons, competing in the Basketball Association of America. In 1949, Fred Zollner brokered the formation of the National Basketball Association from the BAA and the NBL at his kitchen table. From that point on, the Fort Wayne Pistons competed in the NBA. Led by star forward George Yardley, the Fort Wayne Pistons were a very popular franchise and appeared in the NBA Finals in 1954 and 1955, losing both times.

Though the Pistons enjoyed a solid local following, their city's small size made it difficult for them to be profitable. In 1957, Zollner moved the team to Detroit, a much larger city which hadn't seen professional basketball in a decade. In 1947, they had lost the Detroit Gems of the NBL, who moved to become the Minneapolis Lakers (now the Los Angeles Lakers), and the Detroit Falcons of the BAA, who folded. The new Detroit Pistons played in Olympia Stadium (home of the NHL's Detroit Red Wings at the time) for their first four seasons, then moved to Cobo Arena. The franchise was a consistent disappointment, struggling both on the court and at the box office.

In 1974, Zollner sold the team to Bill Davidson, who remains the team's principal owner. Displeased with the team's location in downtown Detroit, Davidson moved them to the suburb of Pontiac in 1978, where they played in the mammoth Silverdome, a structure built for professional football (and the home of the Detroit Lions at the time).

The franchise's fortunes finally began to turn in 1981, when it drafted point guard Isiah Thomas out of Indiana University. In early 1982, the Pistons acquired center Bill Laimbeer in a trade from the Cleveland Cavaliers and guard Vinnie Johnson from the Seattle SuperSonics. The three, along with later acquisitions Joe Dumars (a 1985 Draft pick), Rick Mahorn, Adrian Dantley, and Dennis Rodman, formed the core of a team that would rise to the top of the league.

Initially the Pistons had a tough time moving up the NBA ladder. During the 1984 season, the roof of the Silverdome collapsed during a snowstorm. Because of this, the Pistons played their home games at Joe Louis Arena in downtown Detroit. In 1984, the Pistons lost a tough five-game series to the underdog New York Knicks, three games to two. In the 1985 semi-finals, Detroit would contest the defending champion Celtics to a six game series. Though Boston would prevail, Detroit's surprise performance promised that a rivalry had begun. After losing in the first round of the 1986 playoffs to the more athletic Atlanta Hawks, Coach Daly and team captain Thomas realized that their only hope to gain Eastern dominance would be to construct a more aggressive game-style. They adopted a very intense and physical style in 1987 that quickly gained them the nickname "Bad Boys." It took them to the Eastern Conference Finals, the farthest the team had advanced since moving from Fort Wayne, against the Celtics. After pushing the defending champions to a 2-2 tie, the Pistons were on the verge of winning Game 5 at the Boston Garden with seconds remaining. After a Celtics' turnover, Isiah Thomas attempted to quickly inbound the ball and missed Coach Daly's timeout signal from the bench. Larry Bird stole the inbound pass and passed it to Dennis Johnson for the game-winning layup. While the Pistons would win Game 6 in Detroit, they would lose the series in a tough Game 7 back in Boston.

Motivated by their loss to the Celtics, the 1988 Pistons fine-tuned their "bad boy" style and avenged their two previous playoff losses to the Celtics in the Eastern Conference Finals, defeating them in six games and advancing to the NBA Finals for the first time since the franchise moved to Detroit.

The Pistons' first trip to the Finals saw them face the Los Angeles Lakers, who were led by Magic Johnson, James Worthy, and Kareem Abdul-Jabbar. After taking a 3-2 series lead back to Los Angeles, Detroit appeared poised to win their first NBA title in Game 6. In that game, Isiah Thomas scored an NBA Finals record 25 points in the third quarter while playing on a severely sprained ankle. However, the Lakers won the game, 103-102, on a pair of last-minute free throws by Kareem Abdul-Jabbar following a controversial foul called on Bill Laimbeer, referred to by many Piston supporters, and Laimbeer himself, as a "phantom foul." With Isiah Thomas unable to compete at full strength, the Pistons narrowly fell in Game 7, 108-105.

Prior to the 1988-89 season, the Pistons moved into the lavish Palace of Auburn Hills. The 1989 Pistons completed the building of their roster by trading Dantley for Mark Aguirre, a trade that Piston fans would criticize heavily initially, but later praise. The team won a then-franchise-record 63 games, and steamrolled through the playoffs and into a NBA Finals rematch with the Lakers. This time the Pistons came out victorious in a four-game sweep to win their first NBA championship. Joe Dumars was named NBA Finals MVP.