In 1961, a greeting cards salesman, Leonard Marks, was in a small mom-and-pop shop to sell his line of cards. As he waited for Robert Gilbert, the shop owner, he fiddled with an open box of snow-tire-replacement chain links. Marks became so engrossed in playing, he did not realize how much time had passed. When he told Gilbert that the links would make a great toy, Gilbert referred Marks to Milton Dinhofer, a successful toy inventor in the area. Marks already knew Dinhofer from his high school days and immediately reached out to his old acquaintance. Dinhofer asked Marks to make a plastic sample of the hooks for their meeting.

Milton Dinhofer was a graduate of Rensselaer Polytechnic Institute and a successful importer who already had two toy successes to his credit. He created the first full-size wearable toy space helmet which made the covers of both The Saturday Evening Post (November 8, 1952) and Collier's magazine (April 18, 1953). He also designed and brought to market Sip-n-See. Sip-n-See was the first mass-produced twisted plastic drinking straw and sold over 6 million units. The straws had different characters on them, and it was the s-shaped arms of his cowboy straw that inspired the shape of the monkeys's arms.

When Marks met Dinhofer at his home in Roslyn, New York, he brought a pile of red, s-shaped hooks made from 1/4" plastic rod. Dinhofer immediately imagined monkeys having arms positioned like his cowboy character's. Marks and Dinhofer agreed to form a partnership that night. It was decided that Dinhofer would design the toy, and Marks would sell it. It took Dinhofer three months to go from sketch to functional monkey. He made a sketch for a face and one for a body, but the biggest challenge was the monkey's balance. Once that was achieved, Dinhofer hired A. Santore of A. S. Plastic Model Company to carve a sample under his supervision. Dinhofer then searched for a beryllium-mold maker which was quite a challenge and very expensive as working with plastic was still relatively new. The initial run of monkeys were in many assorted colors, but their shape was just like those Lakeside released in 1965. (Lakeside would eventually add a little more hair to the bodies and decades later change the designs completely). Before Lakeside, the prototype was called Chimp to Chimp. Four of its monkeys were yellow, four were green and four were red. The twelve monkeys allowed three to twelve-year-olds to link them without needing to stand on stools. The Chimp to Chimp prototype came in flat inexpensive packaging which the Woolworth chain offered to carry in their stores. But Woolworth's stipulated that Marks and Dinhofer would have to provide 13 weeks of television advertising which neither could afford. No other buyers were found, and it seemed the game would never come to market. Then, in 1964, Herman Kesler agreed to join the partnership and pitch Barrel of Monkeys to Lakeside Toys where he had connections.

In November of that year, Kesler met with Zelman Levine, the CEO and President of Lakeside Toys at the Essex House in New York City. Also present were Lakeside's vice president, James R. Becker, who would eventually become president, and Stanley Harfenist, Lakeside's future General Manager who was in the process of bringing Gumby to Lakeside. Kesler walked into Levine's room, dropped the monkeys on the table and began to link them together. Becker said it was during the meeting that he brought up the phrase, "more fun than a barrel of monkeys." Levine immediately approved the toy and took all the samples back with him to his headquarters in Minneapolis. Barrel of Monkeys was quickly released in 1965 as a Lakeside toy allowing Marks, Dinhofer and Kesler to receive ongoing royalties. The game was first packaged in a cardboard tube like Lakeside's successful game Pick-Up-Sticks,^[2][3][4] but with a plastic monkey attached to the lid. The monkeys easily broke off the packaging, and, in 1966, a two-piece plastic barrel was introduced. In April 1967, the game was #2 on Toy and Hobby World's Toy Hit Parade chart.^[5]

Lakeside Toys was eventually sold to Leisure Dynamics, Inc. in 1969.^[6] Leisure was sold to Coleco Industries in 1985,^[7] and Coleco was sold to Hasbro Inc. in 1988^[8] The current Hasbro version is sold with ten newly designed monkeys in the barrel.

Unlike the later mono-colored Giant Barrel of Monkeys, the original version included 12 plastic monkeys in three colors; four each in red, blue and yellow.^[9]

These Monkeys have also been used for modeling of polyhedral structures, including virus particles and other protein structures ^[10] In brief, a pair of monkeys can hook around each other in more than eighty different ways, forming quite stable links. The links may be either symmetrical or asymmetrical. Repetition of an asymmetric link generates a helix. A symmetric link is self-limiting, so that the structure cannot grow further unless a new link is used to join symmetric pairs. It is possible to generate structures with point, line, 2D or 3D symmetry by choosing two or three different links (from the 80 or more possibilities) and repeating them systematically. An enormous number of compatible combinations can be found by trial and error. Many are shown in the sources quoted above.

Any repeating unit can in principle be assembled in this way. The only unusual characteristic of the monkey is that its arms, legs, hands and feet are able to twist around each other to form many stable links. In this, they resemble protein molecules which can also link together in many ways. The resulting assemblies simulate biologically important structures, but their symmetry follows general geometric principles. The monkeys provide a 'hands on' approach to understanding these principles. Barrel of Monkeys is also called as Bandar Keela and is famous in south Asian countries.

• A Barrel of Monkeys set appears in the Toy Story series of animated films, in which toys are depicted as sentient creatures that pretend to be lifeless when humans are present. In the films, the monkey toys belonged to the character Andy during his childhood.
• In May 2012, Dartmouth College student Parker Phinney led a fundraising group that built a chain of 5,990 monkeys, the longest ever.^[11][12]
• In the game show Family Game Night, a show featuring many Hasbro-owned game brands, families play the game for a prize by arranging the chains of monkeys from shortest to longest.
• The logos and posters for 1995 film 12 Monkeys and 2015 TV series' borrow Barrel of Monkeys' imagery.
• In Iron Man 3, Tony Stark likens an air rescue to playing Barrel of Monkeys.