Rocksteady was founded on 8 November 2004, by Sefton Hill and Jamie Walker. The team hired many employees from Argonaut Games, a London-based studio which had closed in October 2004.
Rocksteady's first release was the 2006 first-person shooter Urban Chaos: Riot Response, developed using the Havok engine and published by Eidos Interactive for PlayStation 2 and Xbox. After Eidos obtained the rights to make a Batman game in spring 2007, they approached Rocksteady who presented their take to the Batman license, and by May 2007, they had begun developing the concept of Batman: Arkham Asylum, with full production beginning in September 2007. The game was released in August 2009 to critical acclaim and huge commercial success and the studio was then acquired by Time Warner in February 2010, although Square Enix Europe (formerly Eidos Interactive) still holds 25.1 percent share of Rocksteady.
Rocksteady Studios have thus became one of Warner Bros. Interactive Entertainment in-house studios, renowned for their acclaimed games in the Batman: Arkham franchise, as Arkham Asylum was followed by Batman: Arkham City in 2011, and Batman: Arkham Knight in 2015. Although a prequel Arkham game was also developed (Batman: Arkham Origins), Rocksteady did not act as developer for the game; instead, development was handled by WB Games Montréal.
In 2018, Rocksteady is now a wholly owned studio of WB Games.