Open-source licenses are software licenses that allow content to be used, modified, and shared. They facilitate free and open-source software (FOSS) development. Intellectual property (IP) laws restrict the modification and sharing of creative works. Free and open-source licenses use these existing legal structures for an inverse purpose. They grant the recipient the rights to use the software, examine the source code, modify it, and distribute the modifications. These criteria are outlined in the Open Source Definition.

After 1980, the United States began to treat software as a literary work covered by copyright law. Richard Stallman founded the free software movement in response to the rise of proprietary software. The term "open source" was used by the Open Source Initiative (OSI), founded by free-software developers Bruce Perens and Eric S. Raymond. "Open source" emphasizes the strengths of the open development model rather than software freedoms. While the goals behind the terms are different, open-source licenses and free-software licenses describe the same type of licenses.

The two main categories of open-source licenses are permissive and copyleft. Both grant permission to change and distribute software. Typically, they require attribution and disclaim liability. Permissive licenses come from academia. Copyleft licenses come from the free software movement. Copyleft licenses require derivative works to be distributed with the source code and under a similar license. Since the mid-2000s, courts in multiple countries have upheld the terms of both types of license. Software developers have filed cases as copyright infringement and as breaches of contract.

Intellectual property (IP) is a legal category that treats creative output as property, comparable to private property. Legal systems grant the owner of an IP the right to restrict access in many ways. Owners can sell, lease, gift, or license their properties. Multiple types of IP law cover software including trademarks, patents, and copyrights.

Most countries, including the United States (US), have created copyright laws in line with the Berne Convention with slight variations. These laws assign a copyright whenever a work is released in any fixed format. Under US copyright law, the initial release is considered an original work. The creator, or their employer, holds the copyright to this original work and therefore has the exclusive right to make copies, release modified versions, distribute copies, perform publicly, or display the work publicly. Modified versions of the original work are derivative works. When a creator modifies an existing work, they hold the copyright to their modifications. Unless the original work was in the public domain, a derivative work can only be distributed with the permission of every copyright holder.

In 1980, the US government amended the law to treat software as a literary work. Software released after this point was restricted by IP laws. At that time, American activist and programmer Richard Stallman was working as a graduate student at the MIT Computer Science and Artificial Intelligence Laboratory. Stallman witnessed fragmentation among software developers. He blamed the spread of proprietary software and closed models of development. To push back against these trends, Stallman founded the free software movement. Throughout the 1980s, he started the GNU Project to create a free operating system, wrote essays on freedom, founded the Free Software Foundation (FSF), and wrote several free-software licenses. The FSF used existing intellectual property laws for the opposite of their intended goal of restriction. Instead of imposing restrictions, free software explicitly provided freedoms to the recipient.

In the 90s, the term "open source" was coined as an alternative label for free software, and specific criteria were laid out to determine which licenses covered free and open-source software. Two active members of the free-software community, Bruce Perens and Eric S. Raymond, founded the Open Source Initiative (OSI). At Debian, Perens had proposed the Debian Free Software Guidelines (DFSG). The DFSG were drafted to provide a more specific and objective standard for the FOSS that Debian would host in their repositories. The OSI adopted the DSFG and used them as the basis for their Open Source Definition. The Free Software Foundation maintains a rival set of criteria, the Free Software Definition. Historically, these three organizations and their sets of criteria have been the notable authorities in determining whether a license covers free and open-source software. There is significant diversity among individual licenses but little difference between the rival definitions. The three definitions each require that people receiving covered software must be able to use, modify, and redistribute the covered work.

Eric S. Raymond was a proponent of the term "open source" over "free software". He viewed open source as more appealing to businesses and more reflective of the tangible advantages of FOSS development. One of Raymond's goals was to expand the existing hacker community to include large commercial developers. In The Cathedral and the Bazaar, Raymond compared open-source development to the bazaar, an open-air public market. He argued that aside from ethics, the open model provided advantages that proprietary software could not replicate. Raymond focused heavily on feedback, testing, and bug reports. He contrasted the proprietary model where small pools of secretive workers carried out this work with the development of Linux where the pool of testers included potentially the entire world. He summarized this strength as "Given enough eyeballs, all bugs are shallow." The OSI succeeded in bringing open-source development to corporate developers including Sun Microsystems, IBM, Netscape, Mozilla, Apache, Apple Inc., Microsoft, and Nokia. These companies released code under existing licenses and drafted their own to be approved by the OSI.