Founded by Dewey Forker (also known as O.G. Dewey) in the early 1990's as an independent label to scout local Houston hip-hop acts. Dewey and his Underground Records struck it big when they discovered the 5th Ward Boyz. Their talent reached the ears of James Smith, who quickly signed the group to Rap-A-Lot Records in 1992/93. As part of the deal, the Boyz' material would be released through Rap-A-Lot and would allocate Dewey Forker additional rights as well (such as sharing executive producer credits and allowing to use the Underground Record's logo stamp on releases).

Originally the logo for Underground Records was an image of a vinyl record, however it later changed its look to a cityscape background design sometime in the late 90's.