Founded by former Living Blues magazine editor Peter Redvers-Lee and Matthew Johnson[4] in 1992, the label initially specialised in discovering blues players from the North Mississippi region, many of whom had never recorded before. At Fat Possum’s behest some artists, particularly R. L. Burnside, released both standard blues albums and more “techno” albums,[5] done in the style that would later be made famous by Moby’s album Play. This led to a fair amount of controversy among blues purists, a group in which Johnson was largely uninterested.[6]

Many of the early artists for Fat Possum were picked with the aid of New York Times music critic Robert Palmer, who also produced a number of records for the label.

Although their releases were critically acclaimed, particularly Junior Kimbrough’s album All Night Long, which received 4 stars from Rolling Stone and the loud approval of Iggy Pop,[7] Fat Possum was perennially strapped for cash. Word of mouth and artist compilations, such as Not the Same Old Blues Crap 3 (with a cover illustration by Joe Sacco[8]) and All Men Are Liars, gradually pulled Fat Possum out of the red, even if only for brief periods of time. Unfortunately, a legal fight with Capricorn Records, who were to be their distributor, drained Fat Possum’s funds and left a number of projects on the shelf.[9]

R. L. Burnside proved early on to be the label’s biggest money maker. Having toured with The Jon Spencer Blues Explosion, he and Jon Spencer’s band teamed up to record, in a single afternoon,[10] the record A Ass Pocket of Whiskey, which further helped Burnside and Fat Possum gain wider recognition. A remix of the R. L. Burnside song “It’s Bad You Know” was also featured prominently on The Sopranos.

With time, many of the label’s artists have died. Asie Payton, King Ernest, and Charles Caldwell died before their records could be released. Junior Kimbrough died in 1998. R.L. Burnside died in 2005.

As the label has developed, it has begun to broaden its base of artists and sign a range of younger bands such as the Heartless Bastards, Deadboy & the Elephantmen, AA Bondy, The Black Keys, Andrew Bird, and the hip hop group, MellowHype. It has also begun to release more archival records,[11] such as George Mitchell’s 1967 recordings of Furry Lewis, Mississippi Joe Callicott, R.L. Burnside, Townes Van Zandt, and others, with covers designed by Chip Kidd.

The label also took a step in recent years to start releasing music from the new lo-fi rock trend, and released music from artists like Wavves, Crocodiles, and Bass Drum of Death. They also have tapped into the indie-folk scene releasing Verbena’s frontman A.A. Bondy’s solo records.