While there were many small rockets produced over the years for research and experimentation, the first modern model rocket, and more importantly, the model rocket engine, was designed in 1954 by Orville Carlisle, a licensed pyrotechnics expert, and his brother Robert, a model airplane enthusiast. They originally designed the engine and rocket for Robert to use in lectures on the principles of rocket powered flight. But then Orville read articles written in Popular Mechanics by Josh J. Sisneroz about the safety problems associated with young people trying to make their own rocket engines. With the launch of Sputnik, many young people were trying to build their own rocket engines, often with tragic results. Some of these attempts were dramatized in the fact-based movie October Sky. The Carlisles realized their engine design could be marketed and provide a safe outlet for a new hobby. They sent samples to Mr. Stine in January, 1957. Stine, a range safety officer at White Sands Missile Range, built and flew the models, and then devised a safety handbook for the activity based on his experience at the range.

The American National Association of Rocketry was founded in 1957 to help promote not only the hobby, but to promote the safety of the activities related to model rocketry.

Companies

The first American model rocket company was Model Missiles Incorporated (MMI), in Denver, Colorado, opened by Stine and others. Stine had model rocket engines made by a local fireworks company recommended by Carlisle, but reliability and delivery problems forced Stine to approach others. Eventually Stine approached Vernon Estes, the son of a local fireworks maker. Estes founded Estes Industries in 1958 in Denver, Colorado, and developed a high speed automated machine for manufacturing solid model rocket motors for MMI. The machine, nicknamed "Mabel", made low cost motors with great reliability, and did so in quantities much greater than Stine needed. Stine's business faltered and this enabled Estes to market the motors separately. Subsequently, he began marketing model rocket kits in 1960, and eventually, Estes dominated the market. Estes moved his company to Penrose, Colorado in 1961. Estes Industries was acquired by Damon Industries in 1970. It continues to operate in Penrose today.

Competitors like Centuri and Cox came and went in America during the 60's, 70's and 80's, but Estes continued to control the American market, offering discounts to schools and clubs like Boy Scouts of America to help grow the hobby. In recent years, companies like Quest Aerospace have taken a small portion of the market, but Estes continues to be the main source of rockets, motors, and launch equipment for the low powered rocketry hobby today.

High Power Rocketry, which began in the mid-80's with the availability of G through J class motors, a number of companies have shared the market. (Each time a motor's classification goes up by one letter, the total energy in it doubles; thus a G motor is twice an F motor and so on). By the early 1990s, Aerotech, LOC/Precision, and Public Missiles had taken up leadership positions, while Aerotech and a host of engine manufacturers provided ever larger engines, at much higher costs. Companies like Aerotech, Vulcan, and Kosdon were widely popular at launches during this time as high powered rockets routinely broke Mach 1 and reached heights over 3,000 m (10,000 ft). In a span of about 5 years, the largest regularly made production motors available reached N (where it still stands today), which had the equivalent power of over 1,000 D engines combined, and could lift rockets weighing 100 kg (200 lb.) with ease. Custom motor builders continue to operate on the periphery of the market, often creating propellants which produce colored flame (red, blue, and green being common), black smoke and sparking combinations, as well as occasionally building enormous motors up to R class for special projects such as extreme altitude attempts over 17,000 m (50,000 ft).

Engine reliability became a significant issue in the 80s and early 90s, with CATOs (Catastrophe At Take Off) occurring relatively frequently (est. 1 in 20) in motors of L class or higher. At costs exceeding $300 per motor, the need to find an alternative was apparent. Reloadable motor designs (metal sleeves with screwed on end caps and filled with cast propellant slugs) were introduced by Aerotech and became a popular way to reduce the price of launches, since the motor housing was cleaned and reused each time. These engines dominate the market today. At this time (2008) single use motors above G class are quite rare, and many are collectibles. Aerotech, Dr. Rocket, Animal Motor Works, Rouse-Tech, Cessaroni, Ellis Mountain, and Loki Motorworks provide the majority of reloadable systems today.