Based on the musical experimentations of Holopainen, the original band concept was to create acoustic music. The band featured only keyboards, acoustic guitars, and the classical vocals of Turunen. The three musicians recorded their self-titled acoustic demo in the winter of 1996. The name “Nightwish” was derived from the first song the band recorded together. After recording the Nightwish Demo, Holopainen decided that Turunen’s operatic voice was too powerful for an acoustic band, and decided to add in heavy metal elements, including electric guitars and drums.

In early 1997, following the release of the Nightwish Demo, Jukka “Julius” Nevalainen joined the band, and acoustic guitar was replaced with electric guitar. The addition of heavy metal elements to the band's existing experimental style gave the band a unique sound, forming the core of the Nightwish sound.

The band entered the studio in April 1997 to record seven songs for their second demo, entitled Angels Fall First. The full length album Angels Fall First was released internationally in November 1997 and reached number 31 on the Finnish album charts, with the single “The Carpenter” reaching number 3 on the Finnish singles chart.

On October 7, 1998, Nightwish released their second full length album, Oceanborn, in Finland only. Adopting a more technical and progressive sound than Angels Fall First, Oceanborn saw the band abandon much of the ambient and folk elements present on their debut release. Oceanborn was an instant success in Finland, reaching number 5 on the Finnish album charts. The album’s first single, “Sacrament of Wilderness”, hit number 1 on the Finnish singles charts, where it stayed for several weeks. The album’s release was initially limited to Finland, but due to the success of “Sacrement of Wilderness”, Spinefarm released Oceanborn internationally in the spring of 1999.

In May 2000 Nightwish released their third studio album Wishmaster which debuted at #1 on the Finnish album charts, and following three weeks at number one, was certified gold in Finland. In 2001 Nightwish recorded a cover of Gary Moore’s “Over the Hills and Far Away” together with two new songs (“10th Man Down” and “Away”) and a remake of “Astral Romance” (from the Angels Fall First album). This was released as their first, and so far only, EP “Over the Hills and Far Away”. Shortly after the release, bassist Sami Vänskä was asked to leave the band, and Marco Hietala (Tarot, Sinergy) joined the band, effectively leaving Sinergy.

In 2002 Nightwish released “Century Child”, along with the singles “Ever Dream” and “Bless the Child”. The main difference from previous albums is the use of a live orchestra from Finland on “Bless the Child”, “Ever Dream”, “Feel For You” and “The Beauty of the Beast”, to get a more present feeling of classical music. An enduring favorite of fans, though, is the band’s version of “The Phantom of the Opera”, from the famous musical of the same name by composer Andrew Lloyd Webber. The song was repeatedly played on concerts until vocalist Tarja Turunenwas replaced with Anette Olzon whereupon the band announced that they would never play the song live again. "Century Child” was certified gold two hours after its release, and platinum two weeks afterwards.

Vocalist Tarja Turunengot married during the summer of 2003, and there were rumours that the band was about to be dissolved. These rumours were, at the time, proven to be false, as the band continued on to play concerts for another year and released another album. The marriage later meant a great part in Tarja’s dismissal from the band in the autumn of 2005.

A new album entitled “Once” was released on June 7, 2004, along with their first single, “Nemo”, from that album. The single topped the charts in Finland and Hungary, and reached the top ten in five additional countries. “Nemo” therefore remains their most successful single release to date. With Once, Nightwish started to produce so called orchestral versions of the most famous songs – versions where the music is more calmed down, excepting almost all drums and guitars. Famous songs that so far have been produced as orchestral versions are for example “Nemo”, “Ghost Love Score”, “Eva” and “Amaranth”. Once utilizes a full orchestra in nine of the eleven songs on the album. Unlike Century Child, Nightwish decided to look for an orchestra outside of Finland this time, choosing the London Philharmonic Orchestra.

After the recording on 21 October 2005, of the new live DVD End of an Era, the four other members of Nightwish decided that it was best to continue Nightwish without Tarja Turunen a feeling they expressed through an open letter which was given to Turunen by Tuomas Holopainen after the concert. It was written by Holopainen but signed by the other band members. The main justification of Turunen’s dismissal given in the letter was that the band felt that both her husband Marcelo Cabuli (an Argentine businessman) and commercial interests had changed her attitude towards the band. Turunen responded to the incident twice, during a press conference in Finland and in Germany, saying that her dismissal came entirely as a shock to her, given that she had not been notified before the letter was given to her. She felt that the personal attacks on her husband were unwarranted, and that playing the issue out to the public was “senselessly cruel”. She expressed these feelings through her own open letter.

In 2006–2007, the band recorded their sixth full-length studio album, Dark Passion Play. The 35-year-old Alyson Avenue lead singer Anette Olzonfrom Katrineholm, Sweden was announced to replace Turunen. Dark Passion Play was released around Europe in the last week of September, 2007, in the UK on October 1st, and the United States on October 2nd. In this album, perhaps because of former female vocalist Tarja's dismissal, male vocalist Marco Hietala achieves more freedom in his vocals, singing at least back up in every single song of the album with the exceptions of "Eva" and “Amaranth”, and singing lead vocals in several songs, such as “The Islander”, Master Passion Greed, “While Your Lips Are Still Red” and “Reach”.