The first store was opened by Tzvi Steimatzky in 1920 in Tel-Aviv, 6 Hertzel St. In 1925 his half brother Yechezkel Steimatzky opened the second store on Jaffa Road in Jerusalem. Yechezkel Steimatzky was a Russian-born immigrant from Germany. He had originally come to the British Mandate of Palestine on a short visit for the opening of the Hebrew University of Jerusalem and decided to stay after he saw the potential in opening a foreign language bookstore that would serve a growing immigrants' market as well as British Army soldiers serving under the British Mandate. The concept was so successful that he opened an additional store in Haifa later that year. By 1948, another store opened on Allenby Street in Tel Aviv. 
In 1927, Steimatzky saw the potential for expansion throughout the Middle East and opened a store in Beirut. The company name was changed to Steimatzky Middle East Agency. During World War II, a Steimatzky store opened in Baghdad next to the British Army base, and soon after in Cairo, Alexandria, and Damascus. The expansion came to a halt with the outbreak of the 1948 Arab–Israeli war and the nationalization of all the bookstores in the Arab countries. The store's branches in Beirut, Baghdad, Cairo and Damascus were all nationalized after 1948.
As of 2010, Steimatzky has over 160 stores across Israel in various formats. These include mall-based stores, stores with coffee shops, extensive non-book offerings, and larger formats.
The chain's flagship store in the Mamilla neighborhood of Jerusalem is located in the Stern House where Theodore Herzl stayed during his 1898 visit to the city. The lower level of the building houses a small, free museum focusing on the history of the bookstore chain and on Herzl's visit to Jerusalem. On display are photographs of Herzl in Jerusalem, Israeli bank notes featuring portraits of Herzl, and the hat that he wore on his visit to Jerusalem. The museum also depicts the history of the Steimatzky chain, including photographs of the long vanished Steimatzky branch in Lebanon.
Mergers and partnerships
In 1963, the son of founder Yechezkel, Eri Steimatzky, joined the company and became its general manager. In 1995, the Steimatzky company purchased the Sifri chain with seven stores. The chain was a virtual monopoly in Israel until 2002 when two smaller competitors (Tzomet Sfarim, Yerid Hasfarim) and Modan Publishing House united under Tzomet Sfarim brand numbering about forty stores. In 2004, Steimatzky merged with Keter Publishing House. In 2005, Markstone Capital Partners purchased the company.
In 2006, Steimatzky operated stores in 68 cities in Israel as well as in London and Los Angeles. It is estimated that the company holds a 40% share in the Israeli book retailing market and employs over 700 people worldwide.
In September 2007, Eri Steimatzky announced his retirement from the chain, leaving the company in the hands of Markstone Capital.
- Buy the book, Ron Friedman, Jerusalem Post, July 11, 2009
- Grapevine: Steimatzky on display, Jun. 12, 2008, Greer Fay Cashman , THE JERUSALEM POST 
- "Steimatzky CEO seeking consortium to buy the company". Haaretz.com. 14 March 2012. Retrieved 2013-04-15.