Work on Tarsnap began in September 2006 when the author, Dr. Colin Percival, decided that he wanted a better online backup service than was presently available. After slightly more than two years of development and private beta testing, Tarsnap officially entered public beta in November 2008, and attained profitability in February 2009. In September 2011, Tarsnap Backup Inc. was incorporated in British Columbia, Canada.
The Tarsnap client code is built around the open source libarchive archive handling library. While the Tarsnap code is not distributed under an open source license, Tarsnap contributes back to the open source community via bug fixes and enhancements to libarchive (40 commits and counting) and by releasing entirely new code where possible (e.g., the scrypt key derivation function and file encryption code).
At the present time, the Tarsnap service is provided using infrastructure from Amazon Web Services.