In the late 1960s, the term supergroup was coined to describe rock music groups composed of members who had already achieved fame or respect in other groups or as individual artists. Also used to describe Hip Hop collectives, the term took its name from the 1968 album Super Session with Al Kooper, Mike Bloomfield, and Stephen Stills. The coalition of Crosby, Stills, and Nash (later Crosby, Stills, Nash, and Young) is another early example, given the success of their prior bands (The Byrds, Buffalo Springfield, and The Hollies respectively). The term has sometimes been applied more loosely by certain music writers to groups that sold huge numbers of albums and headlined massive concerts regardless of the previous fame of their individual members, such as the band Led Zeppelin, wherein only Jimmy Page was well known at the time the group formed. However, the term as correctly applied refers to the architecture of the group, not the achievements. "Supergroup" also generally does not encompass existing bands whose members achieved individual fame after the band's founding, though some have chosen to retroactively deem such bands (including Pink Floyd, Queen, Genesis and Yes) to be supergroups. There are also instances in which an existing band added a prominent new member or members, where the resulting group might have been considered a supergroup had it not kept its original band name, such as Van Halen after recruiting Sammy Hagar and Gary Cherone, and The Eagles after hiring Joe Walsh and Timothy B. Schmit. By any standards, it is not a rigidly defined category and has become, more than anything, a marketing term.

Supergroups (of the strict definition) tend to be short-lived, often lasting only for an album or two, perhaps because of the natural conflict of egos between established stars. Additionally, supergroups are often formed as side projects that are not intended to be permanent.

In jazz, although it is more common for famous artists to play together, the term is rarely used.