The league began play in 2000 with eight teams. During its initial years of operation, the league focused mainly on teams in larger cities. To attract fans, the ABA encouraged its members to fill rosters with former NBA players and past college basketball stars with local ties.
In 2002–03, the league suspended operations for reorganization. The league resumed play for the 2003–2004 season, but its focus had changed from a few teams in large cities to numerous teams in both large and medium-sized cities. Franchise fees were lowered from $50,000 to $10,000 and the bond requirement was removed in order to attract new teams. The subsequent reduction in initial operating costs allowed the formation of several teams that might otherwise not be possible. However, it also resulted in some under-financed ownership groups. Since 2004, several new teams have failed to complete even their inaugural season due to financial insolvency.
Additionally, teams were organized into regional groups to facilitate interest and reduce travel costs starting with the 2003–2004 season.
The 2004–05 season was the first under this new format, with 37 teams playing that season. Subsequent seasons brought drastic expansion, with some teams proving successful in their early years and others that did not complete their initial seasons. At times, the ABA had 50+ teams playing in a season. Some of the more successful expansion franchises during this era included the Arkansas RimRockers in 2004 and the Rochester Razorsharks in 2005, with each winning the ABA title during the team's first season in the league.
The 2006–07 season saw the nominal cost for a new expansion franchise raised to $20,000, but many still sold for $10,000 – $5,000 or less. In some cases, teams were sold for as little as $1. One notable 2006–07 expansion franchise was the Vermont Frost Heaves, owned by Sports Illustrated writer Alexander Wolff. Also in 2006–07, former NBA player John Salley was named league commissioner, and Maryland Nighthawks owner Tom Doyle was named chief operating officer.
Following the league's first public offering in 2006, it was reported that Joe Newman was voted out of his position as league CEO. The league's required Securities and Exchange Commission filings in February 2007 indicated that the ABA Board of Directors removed Newman as CEO on January 31, 2007. The filings further stated that Newman's actions as CEO would be reviewed to ensure that they were performed with the board's permission. The same filing also claimed that Newman and other shareholders plotted to remove Tom Doyle, John Salley, and David Howitt from the board and to elect Paul Riley as its director. Newman denied his removal ever occurred, and continued as acting CEO. The lawsuits were settled in March 2007 with Doyle's and Salley's resignations from the league's Board of Directors.