Mercedes-AMG started its journey with the Red Pig.

Today, AMG is an internal division of Mercedes-Benz, but in the beginning it was the humble endeavor of two engineers who began AMG's journey to three-pointed glory with a huge sedan called the "Red Pig".

AMG was founded in 1967 by Hans-Werner Aufrecht and Erhard Melcher, whose surnames became the letters "A" and "M" in the word "AMG", with the "G" standing for Aufrecht's birthplace, Grossaspach, Germany. Aufrecht and Melcher worked there before AMG was founded, but the company itself was never based there. The car manufacturing division is currently based in Affalterbach, Germany.

Aufrecht and Melcher began their careers at Daimler-Benz, developing racing engines for the Mercedes-Benz 300 SE. When Daimler-Benz ceased its motorsport activities, the pair continued to develop engines independently from Aufrecht's home in Grossaspach.

In 1965, Manfred Schick, another Daimler veteran, used the improved engine in the German Touring Car Championship, winning ten races. As a result, Aufrecht and Melcher decided to form their own company, and their first task was to build a race car to demonstrate their technology.

The Red Pig, a modified Mercedes-Benz 300 SEL 6.3, was in some ways already a prototype for the modern Mercedes-AMG sports sedan. Mercedes factory took the 6.3-liter V8 from the dictator 600 and fitted it into the more compact body of the 300 SEL to create a kind of German muscle car.

AMG increased displacement to 6.8 liters and increased power from the original 247 hp and 369 lb-ft to 428 hp and 448 lb-ft. The car's body was also lightened, but due to its large four-door construction it remained quite heavy for a race car; the Red Pig won its class and finished second overall at the 1971 24-hour race at Spa, raising AMG's profile.

However, it took some time before AMG began to collaborate with the Mercedes factory. The first car jointly developed was the C36 AMG, which also became the first AMG model in the United States, arriving in showrooms in 1995. AMG models then became a regular feature of the Mercedes factory, and in 1998 Mercedes' parent company, Daimler, acquired a controlling interest in AMG.

AMG moved from tuning existing Mercedes models to developing the SLS AMG and AMG GT sports cars from scratch, and created the Formula One-inspired AMG One supercar.