Charles Lazarus initially started Children's Supermart, which would later evolve into the modern day Toys "R" Us in Washington, DC during the post-war baby boom era in 1948 as a baby furniture retailer. Its first location was at 2461 18th St, NW, where the nightclub, Madam's Organ Blues Bar is currently located. Lazarus began receiving requests from customers for baby toys. After adding baby toys, he got requests for more mature toys. Eventually, the focus of the store changed in 1957 and Toys "R" Us as it is known today was born in Rockville, Maryland. Toys "R" Us was acquired in 1966 by Interstate Stores, owner of the White Front and Topps Department Stores as well as Children's Bargain Town USA, a sister toy store chain to Toys "R" Us in the American Midwest which would later be rebranded as part of the Toys "R" Us chain. The original Toys "R" Us store design in the 1970s and 1980s consisted of vertical rainbow stripes and a brown roof with a front entrance and side exit. Some brown roof locations still exist, although some were painted different colors or renovated in recent years.

In an effort to improve its company, the Board of Directors installed John Eyler, formerly of FAO Schwarz. Eyler launched an unsuccessful, and very expensive plan to remodel and re-launch the chain. Blaming market pressures (primarily competition from Wal-Mart and Target), Toys "R" Us considered splitting its toys and baby businesses. On July 21, 2005, a consortium of Bain Capital Partners LLC, Kohlberg Kravis Roberts & Co. (KKR), and Vornado Realty Trust invested $1.3 billion in new equity to complete the $6.6 billion leveraged buyout of the toy giant. Public stock closed for the last time at $26.74, just pennies from the 68-week high, but far short of its all time high of almost $45 in fourth-quarter 1993, and its five-year high of $31 in 2Q 2001. Toys "R" Us is now a privately owned entity. However, the company still files with the Securities and Exchange Commission as required by its debt agreements. On May 28, 2010 Toys "R" Us filed with the SEC to raise up to $800 million in an initial public offering.

In early 2006, Toys "R" Us won a major battle against Amazon.com after years of bitter battles over their original 10 year contract made at the height of the dotcom boom at the turn of the century. The battle focused on exclusivity rights as viewed from both companies' perspectives. The judge in the matter believed Amazon's top officials were not completely forthcoming in their testimony during the trial:

In her written opinion, New Jersey Superior Court Judge Margaret Mary McVeigh took a rather dim view of the trial testimony of some Amazon executives, including that of the company’s billionaire founder Jeff Bezos, saying she had "no doubt his knowledge and understanding (of the Toys "R" Us agreement) went much deeper than revealed." When pushed on the witness stand, "certain information 'just came back to him'" she said in the ruling, while another of Bezos’ explanations was referred to as "rather childlike."

Toys "R" Us, after winning the right to end its contract with Amazon.com, forged a partnership with GSI Commerce, a company specializing in running e-commerce sites. By the middle of 2006, Amazon's stock had taken serious 15% losses, one consideration being the $50 million per year payment lost from Toys "R" Us. Amazon announced the loss of the case late in the quarter to its stock owners.

On January 9, 2006, Toys "R" Us announced that 87 stores in the United States would close that year, most closing within the spring. Twelve more stores were to be converted to the "Babies "R" Us" format. Approximately 5,000 jobs were eliminated as a result of the closures.

Toys "R" Us Holiday Express is a new series of smaller stores in the United States and Canada opened during the 2009 Christmas shopping season. The Holiday Express stores are much smaller than regular Toys "R" Us locations, often located in malls, and offer a more limited selection of merchandise than would be available at a normal sized standalone Toys "R" Us store. In opening these stores, many of which were located in former KB Toys locations that had not been occupied since the chain's closure in February 2009, Toys "R" Us sought to gain mall customers, take advantage of vacancies in malls and shopping centers, and attempt to fill the void that the KB stores had left behind. Toys "R" Us had planned to close all of these stores by mid-January 2010, but some stores did so well that they were kept open well past the targeted closure dates. The stores that remained open dropped the "Holiday" from their names and became simply known as "Toys "R" Us Express" stores.

Toys "R" Us, Inc. also owns other chains/businesses:

Classic 1980s Toys 'R' Us logo. It is still in use at some Toys R Us locations.

This is logo #2 (1999–2007). This logo has brighter colors than its predecessor logo and a blue star in the "R" (in the middle). It is still in use at most Toys R Us locations.