LaFace was formed in 1989 as a joint venture between the producing duo Antonio "LA" Reid & Kenneth "Babyface" Edmonds and Arista Records. The combined nicknames of the duo's successful production company inspired the name of the label.

LaFace went on to become a highly dominant and successful label throughout the 1990s, responsible for producing popular artists such as TLC, Toni Braxton, OutKast, P!nk, Usher, Goodie Mob, Ciara, Sean Soltys, Donell Jones and Cee-Lo. Towards the end of the decade LaFace produced fewer artists and Babyface began to focus more on his own music career.

The label was acquired completely by Arista and BMG in 1999. In 2001, L.A. Reid was appointed Chairman/CEO of Arista. As a result of Reid's promotion, LaFace was dissolved as most of its prominent acts moved up to the main Arista label to work under Reid.

In 2004, after the corporate restructuring of the BMG labels, LaFace was reactivated as one quarter of the newly reconstructed Zomba Music Group. Also in the Zomba Group portfolio are labels like So So Def Recordings, Verity Records and Jive Records. Most of its former roster that had moved on to Arista returned to the company, upon its reactivation.