Alternative terms for free software, such as OSS, FOSS, and FLOSS, have been a recurring issue among free and open-source software users from the late 1990s onwards. These terms share almost identical licence criteria and development practices.

In 1983 Richard Stallman launched the free software movement and founded the Free Software Foundation to promote the movement and to publish its own definition. Others have published alternative definitions of free software, notably the Debian Free Software Guidelines. In 1998, Bruce Perens and Eric S. Raymond began a campaign to market open-source software and founded the Open Source Initiative, which espoused different goals and a different philosophy from Stallman's.

In the 1950s to the 1990s software culture, the "free software" concept combined the nowadays differentiated software classes of public domain software, Freeware, Shareware and FOSS and was created in academia and by hobbyists and hackers.

When the term "free software" was adopted by Richard Stallman in 1983, it was still ambiguously used to describe several kinds of software. In February 1986 Richard Stallman formally defined "free software" with the publication of The Free Software Definition in the FSF's now-discontinued GNU's Bulletin as software which can be used, studied, modified, and redistributed with little or no restriction, his four essential software freedoms. Richard Stallman's Free Software Definition, adopted by the Free Software Foundation (FSF), defines free software as a matter of liberty, not price, and is inspired by the previous public domain software ecosystem. The canonical source for the document is in the philosophy section of the GNU Project website, where it is published in many languages.

In 1998 the term "open-source software" (abbreviated "OSS") was coined as an alternative to "free software". There were several reasons for the proposal of a new term. On the one hand a group from the free software ecosystem perceived the Free Software Foundation's attitude toward propagandizing the "free software" concept as "moralising and confrontational", which was also associated with the term. In addition, the "available at no cost" ambiguity of the word "free" was seen as discouraging business adoption, as also the historical ambiguous usage of the term "free software". In a 1998 strategy session in California, "open-source software" was selected by Todd Anderson, Larry Augustin, Jon Hall, Sam Ockman, Christine Peterson, and Eric S. Raymond. Richard Stallman had not been invited. The session was arranged in reaction to Netscape's January 1998 announcement of a source code release for Navigator (as Mozilla). Those at the meeting described "open source" as a "replacement label" for free software, and the Open Source Initiative was soon-after founded by Eric Raymond and Bruce Perens to promote the term as part of "a marketing program for free software". The Open Source Definition is used by the Open Source Initiative to determine whether a software license qualifies for the organization's insignia for open source software. The definition was based on the Debian Free Software Guidelines, written and adapted primarily by Bruce Perens. Perens did not base his writing on the four freedoms of free software from the Free Software Foundation, which were only later available on the web. According to the OSI, Stallman initially flirted with the idea of adopting the open source term.

At the end of 1990s the term "open source" gained much traction in public media and acceptance in the software industry in the context of the dotcom bubble and the open-source software driven Web 2.0. For instance, Duke University scholar Christopher M. Kelty described the Free Software movement prior to 1998 as fragmented and "the term Open Source, by contrast, sought to encompass them all in one movement". The term "open source" spread further as part of the open source movement, which inspired many successor movements including the Open content, Open-source hardware, and Open Knowledge movements. Around 2000, the success of "Open source" led several journalists to report that the earlier "Free software" term, movement, and its leader Stallman were becoming "forgotten". In response, Stallman and his FSF objected to the term "open source software" and have since campaigned for the term "free software". Due to the rejection of the term "open source software" by Stallman and FSF, the ecosystem is divided in its terminology. For example, a 2002 European Union survey revealed that 32.6% of FOSS developers associate themselves with OSS, 48% with free software, and only 19.4% are undecided or in between. As both terms "free software" and "open-source software" have their proponents and critics in the FOSS ecosystems, unifying terms have been proposed; these include "software libre" (or libre software), "FLOSS" (free/libre and open-source software), and "FOSS" (or F/OSS, free and open-source software).

The first known use of the phrase free open-source software (in short FOSS or seldom F/OSS) on Usenet was in a posting on March 18, 1998, just a month after the term open source itself was coined. In February 2002, F/OSS appeared on a Usenet newsgroup dedicated to Amiga computer games. In early 2002, MITRE used the term FOSS in what would later be their 2003 report Use of Free and Open Source Software (FOSS) in the U.S. Department of Defense., The European Union's institutions later also used the FOSS term while before using FLOSS, as also scholar in publications.

While probably used earlier (as early as the 1990s) "Software libre" got broader public reception when in 1999 the European Commission had formed a "working group on libre software". The word "libre", borrowed from the Spanish and French languages, means having liberty. This avoids the freedom-cost ambiguity of the English word "free".