The idea for a national, commercial FM network devoted to classical music originated with the management at GWR group, an entrepreneurial group of UK commercial radio stations. It had been operating a trial programme on its AM frequencies in Wiltshire and Bristol, testing audience reaction to a regular drive-time programme of popular classical music. It proved very successful and the company's CEO, Ralph Bernard, and programme director, Michael Bukht, drew up the plans for a national station.

Meanwhile Brian Brolly, formerly the CEO of Andrew Lloyd Webber's Really Useful Group, had a similar idea in 1990. After failing to raise sufficient funds for the project Brolly's consortium was approached by GWR Group and the two merged. The UK Government had decided to award several new national radio licences and invited tenders. Brolly had brought the idea to Rick Senat, the long-serving head of business affairs in London for Warner Brothers and current owner of Hammer Films. Initially rejected by Warner Brothers, Senat showed the project to the President of Time Warner International Broadcasting, Tom McGrath, himself a former classical musician and conductor. Time Warner agreed to back the project but was prohibited under then current UK law from owning more than a 25% interest.

GWR created a business plan which was supported by its major shareholder, DMGT publishers of the Daily Mail. An internal dispute over ownership of the licence was resolved and the consortium was completed after Time Warner agreed to back GWR's plans for the station. As time was running out to raise the £6m needed to launch the station, the GWR investment team spent two days presenting to and finally persuading private investor Sir Peter Michael to back the plan with a 30% investment. The founding shareholder group that launched Classic FM was Sir Peter Michael and Time Warner (each with over 30%), GWR (17%), DMGT (5% and several other smaller shareholders.

The Radio Authority had granted an exemption so that Time Warner could hold more than 25% provided a UK citizen/corporation was larger in the shareholding group. The station rejected the "BBC Radio 3" style of presentation and took as its model New York's WNYC and WGMS in Washington, D.C., with their more populist mix of talk, light classical music, new artists and crossover classical records.

The station is now owened by Global Radio, the UK's largest radio station ownership group. It has broadcast from its current studios on the second floor of 30 Leicester Square, central London, since March 2006.