The earliest records surrounding development of the Miniature Schnauzer in Germany come from the late 1800s.  In the breed’s earliest stages, several small breeds were employed in crosses to bring down the size of the well-established Standard Schnauzer, with the goal of creating a duplicate in miniature.

Crossing with other breeds, such as the Affenpinscher and Miniature Pinscher, sometimes produced dogs with colors that were considered undesirable.  As breeders worked towards the stabilization of the gene pool, mismarked particolors and white puppies were removed from breeding programs.  As puppy mills commonly traded breeding stock back and forth, the gene was introduced into other mills, causing the white gene to become firmly established in several populations.  Commercial breeders sell to pet stores, and these form the genetic basis of the vast majority of "backyard breeder" dogs.  As none of these animals are bred for the show ring, the fact that they do not exhibit quality in type is irrelevant.  However, crossbred animals would have very great difficulty winning or producing winning offspring for the show-breeding gene pool.

The earliest recorded Miniature Schnauzer was in 1888, and the first exhibition was in 1899.  With its boldness and courage, the Miniature Schnauzer was originally used for guarding herds, small farms, and families.  Its small size also made it a good rat-hunting breed.  The AKC accepted registration of the Miniature Schnauzer in 1926, two years after its introduction in the United States.