Although circadian rhythms are endogenous, they are adjusted (entrained) to the environment by external cues called zeitgebers, the primary one of which is daylight.

The earliest known account of a circadian process dates from the 4th century BC, when Androsthenes, a ship captain serving under Alexander the Great, described diurnal leaf movements of the tamarind tree. The first modern observation of endogenous circadian oscillation was by the French scientist Jean-Jacques d'Ortous de Mairan in the 1700s; he noted that 24-hour patterns in the movement of the leaves of the plant Mimosa pudica continued even when the plants were kept in constant darkness.

In 1918, J.S. Szymanski showed that animals are capable of maintaining 24-hour activity patterns in the absence of external cues such as light and changes in temperature. Joseph Takahashi discovered the genetic basis for the rodent circadian rhythm in 1994.

The term "circadian" was coined by Franz Halberg in the late 1950s.

Historically, to differentiate genuinely endogenous circadian rhythms from coincidental or apparent ones, three general criteria must be met: 1) the rhythms persist in the absence of cues, 2) they persist equally precisely over a range of temperatures, and 3) the rhythms can be adjusted to match the local time:

However, criterion 2 (that circadian rhythms persist equally precisely over a range of temperatures) is now understood to not be a factor. Thermal energy will affect the kinetics of all molecular processes, and likewise, temperature changes applied to the circadian clock mechanisms of many organisms (including fungi and even the SCN of mammals) has been shown to affect the frequency of the rhythm, as would be expected. In some instances, heat can provide a stronger zeitgeber than light.

Photosensitive proteins and circadian rhythms are believed to have originated in the earliest cells, with the purpose of protecting the replicating of DNA from high ultraviolet radiation during the daytime. As a result, replication was relegated to the dark. The fungus Neurospora, which exists today, retains this clock-regulated mechanism.

Circadian rhythms allow organisms to anticipate and prepare for precise and regular environmental changes; they have great value in relation to the outside world. The rhythmicity appears to be as important in regulating and coordinating internal metabolic processes, as in coordinating with the environment. This is suggested by the maintenance (heritability) of circadian rhythms in fruit flies after several hundred generations in constant laboratory conditions, as well as in creatures in constant darkness in the wild, and by the experimental elimination of behavioural but not physiological circadian rhythms in quail.

The simplest known circadian clock is that of the prokaryotic cyanobacteria. Recent research has demonstrated that the circadian clock of Synechococcus elongatus can be reconstituted in vitro with just the three proteins of their central oscillator. This clock has been shown to sustain a 22-hour rhythm over several days upon the addition of ATP. Previous explanations of the prokaryotic circadian timekeeper were dependent upon a DNA transcription/translation feedback mechanism.

In 1971, Ronald J. Konopka and Seymour Benzer first identified a genetic component of the biological clock using the fruit fly as a model system. Three mutant lines of flies displayed aberrant behaviour: one had a shorter period, another had a longer one, and the third had none. All three mutations mapped to the same gene, which was named "period". The same gene was identified to be defective in the sleep disorder FASPS (Familial advanced sleep phase syndrome) in human beings thirty years later, underscoring the conserved nature of the molecular circadian clock through evolution. Many more genetic components of the biological clock are now known. Their interactions result in an interlocked feedback loop of gene products resulting in periodic fluctuations that the cells of the body interpret as a specific time of the day.