Kotaku was first launched in October 2004 with Matthew Gallant as its lead writer, with an intended target audience of young men. About a month later, Brian Crecente was brought in to try to save the failing site. Since then, the site has launched several country-specific sites for Australia, Japan, Brazil and the UK. Previous contributors to the site include Luke Smith. Crecente was named one of the 20 most influential people in the video game industry over the past 20 years by GamePro in 2009 and one of gaming's Top 50 journalists by Edge in 2006. The site has made CNET's "Blog 100" list and was ranked 50th on PC Magazine's "Top 100 Classic Web Sites" list. Its name comes from the Japanese otaku (obsessive fan) and the prefix "ko-" (small in size).
Kotaku was one of several websites that was purchased by Univision Communications in their acquisition of Gawker Media in August 2016; Gizmodo Media Group was subsequently founded to house the Gawker acquisitions, operating under the Fusion Media Group, a division of Univision. The Gizmodo Media Group was later acquired by the private equity firm Great Hill Partners in April 2019, and renamed G/O Media.
The transition to G/O Media had let to several departures from the site, as well as from other sister sites under the form Gawker Media label due to conflicts with G/O Media's management. Cecilia D'Anastasio left Kotaku in December 2019 to become a journalist for Wired. Joshua Rivera and Gita Jackson left in January 2020 stating it was impossible to work with the new management. Jason Schreier, one of Kotaku's writers since 2012 known for in-depth coverage of working conditions at various studios and development histories for various games, announced his departure from the site on April 16, 2020, citing the issues surrounding G/O Media which filtered into disruptions at their sister website Deadspin around October 2019. Schreier subsequently took a position at Bloomberg News. In May 2020, senior writer Heather Alexandra departed from Kotaku, similarly citing conflicts with management, and joined Double Fine Productions as their content and community manager. Kotaku UK was to close in September 2020 
In 2007, attorney Jack Thompson sued Gawker Media and site editor Brian Crecente over concerns that Kotaku declined to remove threatening user comments, but the lawsuit was dismissed the next day. In 2009, Business Insider reported that Hearst Corporation sought to buy Kotaku from Gawker Media. In 2010, Kotaku criticized Japanese magazine Famitsu's glowing endorsement of a Konami game as a conflict of interest; Konami subsequently revoked Kotaku's invitation to the game's launch party. In 2013, Forbes criticized Kotaku over what they called an inflammatory headline in a story about Hideki Kamiya; Kotaku rewrote the headline.
In 2007, Kotaku ran a story about rumored upcoming features on the PlayStation 3, and Sony responded by temporarily blacklisting the website. The site claimed in 2015 that they had been blacklisted by major game companies Bethesda Softworks and Ubisoft.
In 2014, Kotaku was part of the accusations that instigated the Gamergate controversy when a writer from the site, Nathan Grayson, was alleged to have written a favorable review of the game Depression Quest due to his relationship with its developer, Zoë Quinn. After conducting an internal review, it was discovered that no review of Depression Quest existed and he had only written one article that mentioned her in passing before their relationship began. The subreddit /r/KotakuInAction became a hub for the Gamergate community. Its creator attempted to shut it down in 2018, claiming that it had become a "viral cancer", but it was reinstated by a Reddit administrator due to the site's guidelines.