MZ history starts in 1945. In 1922 Dane Jorgen Skafte Rasmussen founded a company to make steam engines. The name of that company Dampf Kraftmachine Werkes means literally Steam Machine Factory. In 1922 DKW made their first motorcycle. During the following years DKW rose to become the largest seller of motorcycles in the world and knocked BSA off the top spot. They had constantly improved the quality of their factory production which made them profitable and lead to a wide range of models.

In 1932 DKW licensed the Schnürle Reverse Flow design which was used in their two cycle (Day Cycle) engines which dramatically improved power and economy of their motorcycle and automobile engines. DKW also introduced a number of Day engined automobiles. The DKW Front was the first front wheel drive automobile to be created.

The major motorcycle makers in Germany were producing about 2/3rds of all motorcycles sold in the world approaching 1939. The war resulted in their production being converted to military use. The original DKW factory in Zschopau ended up in East Germany after the war and was put into service producing the same machines that DKW had prior to the war, with the same name. A law suit ended that practice. East German DKW motorcycles were later sold under the names of IFA, MuZ and finally MZ.

The DKW RT125 design of 1939 became the most copied motorcycle in the world after the war due to the DKW patents having been nullified. It was copied by BSA, Harley-Davidson, Minsk, Yamaha and also in Poland and China.

When DKW resumed production at a new plant in West Germany they designated the RT125 with a W to indicate it was the West German version.

MZ bankrupted a few years ago and has been rescued. MZ has recently been moved to a new factory.

In the 1950s Water Kaaden improved on the original three port Schnürle system adding two more ports. The MZ racers were very successful as the result of his improvements which were coupled with the use of an expansion chamber to dramatically increase the amount of power coming from the Day cycle engine.