The opium poppy was cultivated in lower Mesopotamia as long ago as 3400 BC. The chemical analysis of opium in the 19th century revealed that most of its activity could be ascribed to two ingredients, codeine and morphine.

Heroin was first synthesized in 1874 by C.R. Alder Wright, an English chemist working at St. Mary's Hospital Medical School in London, England. He had been experimenting with combining morphine with various acids. He boiled anhydrous morphine alkaloid with acetic anhydride over a stove for several hours and produced a more potent, acetylated form of morphine, now called diacetylmorphine. The compound was sent to F.M. Pierce of Owens College in Manchester for analysis, who reported the following to Wright:

Doses … were subcutaneously injected into young dogs and rabbits … with the following general results … great prostration, fear, and sleepiness speedily following the administration, the eyes being sensitive, and pupils constrict, considerable salivation being produced in dogs, and slight tendency to vomiting in some cases, but no actual emesis. Respiration was at first quickened, but subsequently reduced, and the heart's action was diminished, and rendered irregular. Marked want of coordinating power over the muscular movements, and loss of power in the pelvis and hind limbs, together with a diminution of temperature in the rectum of about 4°(rectal failure).
However, as is often the case with scientific discovery, Wright's invention did not lead to any further developments, and heroin's fame would only begin to grow after it was independently re-synthesized 23 years later by another chemist, Felix Hoffmann. Hoffman was working at the Bayer pharmaceutical company in Elberfeld, Germany, where the head of his laboratory was Heinrich Dreser. Dreser instructed Hoffmann to acetylate morphine, with the objective of producing codeine, a natural derivative of the opium poppy, similar to morphine but less potent and held to be less addictive. But instead of producing codeine, the experiment produced a substance that was actually three times more potent than morphine. Bayer would name the substance "heroin", probably from the word heroisch, German for heroic, because in field studies people using the medicine felt "heroic".

From 1898 through to 1910 heroin was marketed as a non-addictive morphine substitute and cough medicine for children. Bayer marketed heroin as a cure for morphine addiction before it was discovered that heroin is converted to morphine when metabolized in the liver. The company was somewhat embarrassed by this new finding and it became a historical blunder for Bayer.

As with aspirin, Bayer lost some of its trademark rights to heroin following the German defeat in World War I.

In the United States the Harrison Narcotics Tax Act was passed in 1914 to control the sale and distribution of heroin. The law did allow heroin to be prescribed and sold for medical purposes. In particular, addicts could often still be legally supplied with heroin. In 1924, the United States Congress passed additional legislation banning the sale, importation or manufacture of heroin in the United States. It is now a Schedule I substance, and is thus illegal