The label was first founded in early 1985 by Chris Hanzsek and Tina Casale. The label's first release in March 1986 was Deep Six (CZ001), a compilation LP featuring early grunge bands Soundgarden, Melvins, Green River, Skin Yard, Malfunkshun, and The U-Men. The record was commercially unsuccessful, and after around 18 months, Hanzsek and Casale decided to sell the label.
Daniel House, bass player for Skin Yard, who was recording the band's first album at the time, took over the operation of C/Z records. Over the following years, C/Z Records became an outlet for many unsigned Seattle bands. In 1989, House began working as director of sales for newly-formed Seattle independent record label Sub Pop. Eventually he left C/Z Records, and subsequently released early albums and singles by The Presidents of the United States of America, Melvins, Built to Spill, 7 Year Bitch, The Gits, Silkworm and Hammerbox.
In 1993, C/Z entered into a production and distribution deal with Sony-owned RED Distribution. The deal had a negative impact on the label,[citation needed], which was forced to downsize, and did not issue any new releases for over a year.
In 1996, BMG-owned Zoo Entertainment partnered with C/Z, providing an operating and recording budget and assisting in the development of new artists. In 1997, Zoo was purchased by Volcano Entertainment and all third party ventures were dropped.
Daniel House subsequently returned C/Z to part-time status, releasing only occasional records on an infrequent basis.