The company was founded by Paul Reichmann and his brothers, Albert and Ralph, in Toronto in the early 1950s as an outgrowth of their flooring and tile company. It first built and operated warehouses and other commercial buildings in Toronto. Its first major project was the development of the vast Flemingdon Park project on Don Mills Road.
The company then took a major gamble, winning the fierce bidding war for the final undeveloped property at the corner of King and Bay street (the geographic heart of Canada's financial district). The Reichmans won the contract to build Canada's tallest building, First Canadian Place in 1971. The project almost collapsed, however, when reformist mayor David Crombie put a halt to major development projects. After three years of lobbying the project finally went ahead to great success.
In the 1980s, Olympia & York grew to be the largest property development firm in the world. In the early 1980s, the New York real estate market was severely depressed, and the Reichmanns bought a group of nine skyscrapers for the low price of 300 million dollars. In only a few years the group rose in value to 3.5 billion. The company became centred on New York opening an office on Park Avenue. The company won the rights to the largest development project in the city when they were awarded the contract to develop the Battery Park City infill next door to the World Trade Center. This project became the World Financial Center and was another great success for the firm.
Both Reichmann brothers were strongly religious Haredi Jews and shut down their construction sites for the Jewish Sabbath and for all Jewish holidays. Even while the success of O&Y made them one of the world's richest families they continued to live relatively austere lives.
In the mid-1980s the company diversified. In 1985 it bought Gulf Canada, a deal that attracted much controversy because it earned the company multimillion-dollar tax breaks. They also acquired a 50.1% control of Brinco Ltd. in 1980 then the following year an 82% controlling interest in Abitibi-Price Inc. As well, they held a significant shareholding in the Royal Trust Company. In 1980, they had also acquired English Property Corp, one of the largest British developers, which would eventually lead to the Canary Wharf property development. Following a highly publicized legal battle with Britain's Allied Lyons PLC for control of Canadian-based distillers Hiram Walker-Gooderham and Worts Distillery, the makers of the popular Canadian Club brand of rye whiskey, in 1987 Olympia & York became Allied Lyons' largest shareholder.