In the mid-eighties an ambitious young luthier from Maryland named Paul Reed Smith stood the guitar manufacturing industry on its head. Focusing on uniquely brilliant finishes and refining a double octave, set neck guitar that was to become the PRS Custom 24, PRS Guitars was born and proved able to compete with the "big two" (Fender and Gibson).

Paul Reed Smith is famously successful for converting Carlos Santana to his guitars, first approaching the guitar hero with early PRS prototypes in the late seventies. These days Carlos plays PRS guitars almost exclusively and has several lines named in his honor.

In the late eighties PRS successfully added a bolt-on, the CE 24 to their lineup. In the nineties PRS enlisted design support from legendary Gibson President Ted McCarty and a line of PRS guitars bears his name. Characteristically, McCarty's contributions included a thicker solidbody style and the development of a series of PRS hollowbodys.

In 1995, due to increasing demand, PRS Guitars expanded into a large manufacturing facility in Stevensville, MD, from which they still operate. Guitars produced in the new plant, despite some silly grumblings in the industry (see prs neck heel), have retained their high quality and PRS has yet to undergo an obvious slump in production.