Gateway was founded on September 5, 1985, on a farm outside Sioux City, Iowa, by Ted Waitt and Mike Hammond. Originally called Gateway 2000, it was one of the first widely successful direct sales companies, utilizing a sales model copied by Dell, and playing up its Iowa roots with low-tech advertisements proclaiming "Computers from Iowa?". Shipping computers in spotted boxes patterned after cow markings (specifically, those of Holstein cows) became a gateway standard. In 1989 Gateway moved its corporate offices and production facilities to South Dakota. In line with the Holstein cow mascot, Gateway opened a chain of retail stores called Gateway Country Stores, mostly in suburban areas across the United States. It dropped the "2000" from its name in 1998.

Gateway bought Amiga computer assets in 1997 and in 2000 they sold the Amiga brand.

Gateway struggled after the dot-com bust and tried several strategies to return to profitability, including withdrawal from international markets, reduction in the number of retail stores and most significantly, entering the consumer electronics business. None of these efforts were particularly successful, and Gateway continued to lose market share and suffered major losses. By April 1, 2004, Gateway had announced that it would shut down its 188 remaining stores. The last day of operations for most of the stores was April 9, 2004.

On March 11, 2004, Gateway purchased low-cost PC maker eMachines, for $30 million in cash and 50 million shares of stock, valuing the deal at approximately $262 million with announced intentions to keep the eMachines brand. Gateway had hopes that eMachines' outsourced manufacturing process would help cut costs and that their profitable retail business would help Gateway's bottom line. Through the deal, founder Ted Waitt turned over day-to-day responsibilities and the CEO role to eMachines' CEO, Wayne Inouye, and remained as chairman through May 2005. Inouye announced his resignation as CEO on February 9, 2006; Chairman Richard Snyder served as interim CEO until September 7 2006 when J. Edward Coleman was brought in as the new CEO.

Despite its folksy branding, Gateway has long outsourced some of its operations, such as customer support. In 2002, Gateway expanded into the consumer electronics world with products that included plasma screen TVs, digital cameras, DLP projectors, wireless internet routers and MP3 players. Although the company enjoyed some success in gaining market share from traditional leaders in the space, the limited short-term profit potential of the product line led then-CEO Wayne Inouye to pull the company out of that segment during 2004. Gateway still acts as a retailer selling third-party electronic goods online.

Gateway sells to specific markets including Home & Home Office, Small Business, Medium & Large Business, Government and Education. They do not use brand names to market products, instead using product models. They currently market a range of laptop products for the home markets including the NX100X, CX210, NX260X, NX560 and NX860 series. They also market a range of desktops including the DX420, FX510, and Profile 6 series. These products are advertised as affordable and productive computers. The Profile 6 is an All-in-one system similar in design to Apple's iMac G5. Their lowest priced system is the DX420B Series, with a monitor sold separately.

Gateway currently sells seven LCD-based computer monitors as of September 25, 2006, including one 15" model, two 17" models, three 19" models, and one 21" model. Some include USB ports. Shortly after the dot com bubble, Gateway entered the consumer electronics market, manufacturing digital cameras and other devices. None of these products were successful, and Gateway has stopped production and sales of them as of 2006.

Gateway also markets "Convertible Notebooks", notebook PCs combined with tablet PC technology including handwriting recognition with a stylus much like a personal digital assistant (PDA).

Gateway sells a line of low-end to medium-sized PC servers. These servers are manufactured by what was Advanced Logic Research, a former pioneer in PC servers, which was acquired by Gateway.