The band emerged from the radical West German commune scene of the late 1960s, with others in the same commune including some of the future founders of the Red Army Faction. Founding members are Chris Karrer, Dieter Serfas, Falk Rogner, John Weinzierl and Renate Knaup-Krötenschwanz. The band was founded after Weinzierl and the others met at the Amon Düül "art commune" in Munich. The commune consisted mainly of university students, who formed a music group initially to fund the commune, with everyone who lived there joining in to play music whether or not they had any experience or ability. The commune split when they were offered an opportunity to record, which was boycotted by the more musically proficient members of the commune (who went on to form Amon Düül II). Recordings were made by the other members but were of very poor quality and were only released later (under the name Amon Düül) to capitalise on the success of Amon Düül II's albums. As Amon Düül II grew and personnel changed, they still remained a commune, living together as a band.

Amon Düül II is generally considered to be one of the founders of the Krautrock scene and a seminal influence on the development of it.