The modern-day club was formed in 1945, when gymnastics club Turnverein Hoffenheim (founded 1 July 1899) and football club Fußballverein Hoffenheim (founded 1921) merged. At the beginning of the 1990s, the club was an obscure local amateur side playing in the eighth division Baden-Württemberg A-Liga. They steadily improved and by 1996 were competing in the Verbandsliga Nordbaden (V).
Around 2000, alumnus Dietmar Hopp returned to the club of his youth as a financial backer. Hopp was the co-founder of software firm SAP and he put some of his money into the club. His contributions generated almost immediate results: in 2000 Hoffenheim finished first in the Verbandsliga and was promoted to the fourth-division Oberliga Baden-Württemberg. Another first place finish moved the club up to the Regionalliga Süd (III) for the 2001–02 season. They finished 13th in their first season in the Regionalliga, but improved significantly the next year, earning a fifth place result.
Hoffenheim earned fifth and seventh place finishes in the next two seasons, before improving to fourth in 2005–06 to earn their best result to date. The club made its first German Cup appearance in the 2003–04 competition and performed well, advancing to the quarterfinals by eliminating 2. Bundesliga sides Eintracht Trier and Karlsruher SC and Bundesliga club Bayer Leverkusen before being put out themselves by another 2. Bundesliga side, VfB Lübeck.
Negotiations to merge TSG Hoffenheim, FC Astoria Walldorf, and SV Sandhausen to create FC Heidelberg 06 in 2005 were abandoned due to the resistance of the latter two clubs, and the failure to agree on whether the new side's stadium should be located in Heidelberg or Eppelheim. Team owner Hopp clearly preferred Heidelberg, but could not overcome the resistance of local firm Wild, which had already reserved the site of the planned stadium for its new production facilities.
The 2007–08 season was Hoffenheim's first season in professional football. After a weak start with three losses and only one draw in the first four games, the team's performance improved remarkably and Hoffenheim climbed from 16th place on matchday four to second place on matchday 23. The team managed to defend their place until the end of the season, having scored 60 points after matchday 34. As a result of their second place finish they received automatic promotion to the Bundesliga, the highest German tier in football, after just playing in the 2. Bundesliga for one season.
The 2008–09 season was Hoffenheim's first season in the German top division. With the performance of strikers Vedad Ibišević, Demba Ba and Chinedu Obasi the newly promoted Hoffenheim managed to climb to the top of the table quickly, winning the "Herbstmeister" (Autumn-Champion) title with 35 points after 17 matchdays. Ibišević scored a total of 18 goals in 17 matches, being the Bundesliga's leading goal scorer after the first half of the season. Hoffenheim's fast and offensive playing style (42 goals in 17 matches) was praised by the German and international press, experts even believed Hoffenheim could win their first championship in their first year playing top flight football.
However, Hoffenheim suffered a devastating blow during the winter break when Ibišević tore an anterior cruciate ligament during a training match against Hamburg. Because of the serious injury Ibišević was unable to play for the second half of the season. Hoffenheim was now deprived of their biggest offensive threat and additionally had to deal with a fair number of other injuries and suspensions. As a result of their heavily debilitated squad Hoffenheim failed to build on their successful first half of the season. After not winning in 12 consecutive matches, Hoffenheim was dislodged from the top and dropped out of the top five down to ninth place. At the end of the season the team however recovered and ended their negative streak with three wins and one draw in the last four games. Hoffenheim eventually finished seventh with 55 points and a goal difference of +14 – still a respectable result for a newly promoted team.
In the 2009–10 season Hoffenheim further improved their squad by signing midfielders Maicosuel and Franco Zuculini, as well as experienced defender Josip Šimunić. Alumnus Hopp expected a position within the top five and a qualification for the UEFA Europa League at the end of the season. Indeed, Hoffenheim enjoyed success at the beginning of the season and remained in the top five for several weeks. However, the club again suffered from a large number of injuries and suspensions in the second half of the season and only won four of the 17 matches. The club finished on a disappointing eleventh place with 42 points and a goal difference of +2. Coach Ralf Rangnick was criticised in public for the poor results of his team, yet his contract was extended for two more years in May.
On 1 January 2011, Hoffenheim sold Brazilian midfielder Luiz Gustavo to league rivals FC Bayern Munich for a reported fee of €17 million. Immediately after the transfer had been completed, Hoffenheim Coach Ralf Rangnick resigned and was then replaced by Marco Pezzaiuoli, who had been Rangnick's assistant before. Rangnick had disapproved the transfer in the weeks before since Hoffenheim was in reach of the top 5 and was one of the eight teams left in the 2010–11 DFB-Pokal.
Dietmar Hopp's financial support, which transformed Hoffenheim from a local amateur club into a competitive Bundesliga club, has been strongly criticized by other clubs, fans and some in the German press. The main points of criticism are the club's lack of "tradition" and a proper fan base as the club is a historically insignificant side from a village of just 3,300 inhabitants. The situation is akin to that of now-defunct Scottish side Gretna and German clubs VfL Wolfsburg and Bayer 04 Leverkusen, as those teams also received large financial support by companies. VfL Wolfsburg is wholly owned and supported by automobile manufacturer VW, Bayer 04 Leverkusen by pharmaceutical company Bayer. Despite this Leverkusen and Wolfsburg are nonetheless different from Hoffenheim because of their long history as football clubs founded by the factory workers themselves, and have been successful chiefly through their own merits rather than outside funding.
On 16 August 2011, the club released a statement regarding complaints of a loudspeaker that was strategically placed under away fans during a home game against Borussia Dortmund. The loudspeaker was designed to drown out the noise of the away fans cheers and chants during the game. It is reported that the speaker was placed by the groundskeeper and the club denies any involvement saying he acted alone. It is also reported that the loudspeaker was used during other games not just the home game against Borussia Dortmund.
In a later statement the club admitted that the disruptive sound assembly has been used at least five times, although club officials claim to have no knowledge of these measures.
With the rise of the first team the club's reserve side, TSG 1899 Hoffenheim II, started to climb through the ranks, too. It entered the Verbandsliga Baden in 2001 and won promotion to the Oberliga Baden-Württemberg in its second season there. After seven seasons in the Oberliga the team won promotion to the Regionalliga Süd after a league title in 2010. With the disbanding of the Regionalliga Süd in 2012 Hoffenheim II became part of the new Regionalliga Südwest.
Before being promoted to the 1. Bundesliga in 2008, the club played in Dietmar-Hopp-Stadion which was built in 1999 with a capacity of 5,000 (1,620 seats).
TSG 1899 Hoffenheim made their loftier ambitions clear in 2006 when the club's management decided to build the new 30,150 seat Rhein-Neckar-Arena suitable for hosting Bundesliga matches. The stadium was originally to be built in Heidelberg before the selection of a site in Sinsheim.
They opened their first season in the 1. Bundesliga at the 26,022 capacity Carl-Benz-Stadion in Mannheim and played their first match in their new stadium on 31 January 2009.
With the introduction of the Regionalligas in 1994 and the 3. Liga in 2008 as the new third tier, below the 2. Bundesliga, all leagues below dropped one tier. In 2012, the number of Regionalligas was increased from three to five with all Regionalliga Süd clubs except the Bavarian ones entering the new Regionalliga Südwest.