Carl Zeiss opened an optics workshop in Jena in 1846. By 1847 he was making microscopes full-time. By 1861 Zeiss was considered to be among the best scientific instruments in Germany with about 20 people working under him with his business still growing. By 1866 the Zeiss workshop sold their 1,000th microscope. In 1872 physicist Ernst Abbe joined Zeiss and along with Otto Schott designed greatly improve lenses for the optical instruments they were producing. After Carl Zeiss's death in 1888, the business was incorporated as the Carl-Zeiss-Stiftung in 1889.

By World War I, Zeiss was the world's largest location of camera production. Zeiss Ikon represented a significant part of the production along with dozens of other brands and factories, and also had major works at Dresden.

In 1928 Hensoldt AG was acquired by Carl Zeiss and has produced the Zeiss binoculars and riflescopes since 1964.,occasionally resulting in twin products being offered under both the Hensoldt and Zeiss brand names. The Hensoldt System Technology division (resulting from a merger of the military optics operations of Leica and Hensoldt) was continued by Zeiss under the Hensoldt name until 2006.

As part of Nazi Germany Zwangsarbeiter program, Zeiss used forced labour during the Second World War. The destruction of the war caused many companies to divide into smaller subcompanies and others to merge together. There was great respect for the engineering innovation that came out of Dresden—before the war the world's first 35 mm single-lens reflex camera, the Kine Exakta, and the first miniature camera with good picture quality were developed there.

At the end of the war Jena was occupied by the US Army. When Jena and Dresden were incorporated into the Soviet occupation zone, later East Germany, Zeiss Jena was assisted by the US army to relocate to the Contessa manufacturing facility in Stuttgart, West Germany, while the remainder of Zeiss Jena was taken over by the (Eastern) German Democratic Republic as Kombinat VEB Zeiss Jena. As part of the World War II reparations, the Soviet army took most of the existing Zeiss factories and tooling back to the Soviet Union as the Kiev camera works, which produced copies of the Contax and other Zeiss Ikon products.

The western business was restarted in Oberkochen (in southwestern Germany) as Opton Optische Werke Oberkochen GmbH in 1946, which became Zeiss-Opton Optische Werke Oberkochen GmbH in 1947, but was soon renamed to Carl Zeiss. West German Zeiss products were labelled Opton for sale in the Eastern bloc, while East German Zeiss products were labelled "Zeiss Jena" for sale in Western countries.

In 1973, the Western Carl Zeiss AG entered into a licensing agreement with the Japanese camera company Yashica to produce a series of high-quality 35 mm film cameras and lenses bearing the Contax and Zeiss brand names. This collaboration continued under Yashica's successor, Kyocera, until the latter ceased all camera production in 2005. Zeiss later produced lenses for the space industry and, more recently, has again produced high-quality 35 mm camera lenses.

Following German reunification, VEB Zeiss Jena became Zeiss Jena GmbH, which became Jenoptik Carl Zeiss Jena GmbH in 1990. In 1991, Jenoptik Carl Zeiss Jena was split in two, with Carl Zeiss AG (Oberkochen) taking over the company's divisions for microscopy and other precision optics (effectively reuniting the pre-war Carl Zeiss enterprise) and moving its microscopy and planetarium divisions back to Jena. Jenoptik GmbH was split off as a specialty company in the areas of photonics,optoelectronics, and mechatronics.

The Hensoldt AG was renamed Carl Zeiss Sports Optics GmbH on 1 October 2006.

The companies of the Zeiss Gruppe in and around Dresden have branched into new technologies: screens and products for the automotive industry, for example. Zeiss nonetheless still continues to be a camera manufacturer, and still produces the Pentacon, Praktica and special-use lenses (e.g., Exakta).

Today, there are arguably three companies with primarily Zeiss Ikon heritage: Zeiss Germany, the Finnish/Swedish Ikon (which bought the West German Zeiss Ikon AG), and the independent eastern Zeiss Ikon.