Beer has been brewed in Estonia for more than a thousand years; the first written mention of it here dates from 1284. In the towns brewing for sale was a right of the merchants: in Tartu the brewing rules of the Great Guild are first mentioned in 1461, and in 1782 the Russian crown gave the trade in Tartu and Pärnu to brewers' companies; in Tartu theirs lasted until the excise law of 1863 let anyone who paid the tax open a brewery. The manors brewed for their people and their taverns, and farmhouse beer (koduõlu), flavoured with juniper and not boiled, is still made on the western islands; the Pihtla brewery on Saaremaa logged its first batch of 500 litres on 21 December 1990.

Industrial brewing came in the 19th century. In 1820 Count Karl Friedrich von Rehbinder set up a brewhouse at Saku manor near Tallinn; Valerian Baggo replaced it with a steam brewery in 1876–1877, and from 1899 a narrow-gauge railway carried Saku beer to Tallinn, where its competition closed the Revalia brewery in 1911. In Tartu the breweries of B. J. Hesse (1800) and J. R. Schramm (1826) grew into Tivoli, which the London firm A. Le Coq, known in Russia for its Imperial Extra Double Stout, bought in 1912 and named after itself in 1913. In Pärnu Eduard Bliebernicht founded a brewery in 1879.

The First World War stopped brewing from 1914 to 1921. In the Republic of Estonia the brewers shared the country in 1926: A. Le Coq took the south and Saku the north, and most small breweries became their dealers. In 1940 the Soviet authorities nationalised the breweries; A. Le Coq became Tartu Õlletehas, from 1973 the Tartu Experimental Brewery, and Saku became an experimental brewery in 1976. New breweries opened in Kuressaare (1970), at Haljala, where the Viru collective farm began with Žiguli in 1975, and at Karksi (1977). Gorbachev's dry law of 1985 halted the renewal of Saku.

After independence was restored in 1991 the big breweries passed to Nordic owners: Saku went into a joint venture with Baltic Beverages Holding in 1991 and has belonged wholly to Carlsberg since 2008; the Danish Harboe bought control of Viru Õlu in 1992; Tartu Õlletehas, privatised in 1995, was sold with the Kuressaare brewery to the Finnish Olvi in 1997 and took the A. Le Coq name again in 1999. The Pärnu brewery, Puls from 2006, went bankrupt in 2009 and Karksi closed in 2015. Harboe moved the Viru beers to its German and Danish breweries in 2020; the Haljala plant was leased to the Finnish Pyynikin, which brewed there from 2021 but has since ended its Estonian production (September 2026). Saku and A. Le Coq hold over 90 per cent of the market. In June 2026 A. Le Coq, owned by Olvi, completed its purchase of the mineral water maker Värska Originaal after Saku's court challenge failed.

Craft beer came late. Põhjala, founded in 2011, released its first beer in early 2013, opened its own brewery in Tallinn in April 2014 and moved to Noblessner in 2018; Lehe in Keila, Õllenaut, Sori, Tanker (bought by Royal Unibrew in 2021), Pühaste and others followed, and the Estonian Association of Small Brewers was founded in 2013. By 2017 the country had nearly 30 microbreweries, and Tuletorn, a brewpub of Põhjala's former head brewer, opened in 2024; but the companies of Lehe (2025) and Sori (2026) have been struck off the register. Independent brewers of up to 15,000 hl a year pay half the excise, which rose by 10 per cent on 1 January 2026. In 2025 Estonia brewed 107.2 million litres of beer and sold 41.3 million litres abroad.