The band members began as friends who knew each other from various colleges and schools across Birmingham. The name "UB40" was selected in reference to a paper form issued by the UK government's Department of Health and Social Security at the time of the band's formation for claiming unemployment benefit. The designation UB40 stood for Unemployment Benefit, Form 40.

Before any of them could play their instruments, Ali Campbell and Brian Travers travelled around Birmingham promoting the band, putting up UB40 posters. The band purchased its first instruments from Woodroffe's Musical Instruments with £4,000 in compensation money that Campbell, who would become the lead singer, received after a bar fight during his 17th birthday celebration. Their first gig took place on February 9, 1979 at The Hare & Hounds Pub in Kings Heath, Birmingham for a friend's birthday party.

UB40 caught their first break when Chrissie Hyndenoticed them at a pub and gave them an opportunity as a support act to her band, The Pretenders. UB40's first single, "King"/"Food for Thought" was released on Graduate Records, a local independent label. It reached No. 4 on the UK Singles Chart.

Their first album was titled Signing Off, as the band were signing off from or closing their claim on the unemployment benefit. It was recorded in a bedsit in Birmingham and was produced by Bob Lamb. Signing Off was released on September 6, 1980, and entered the UK Albums Chart on October 2, 1980. It reached as high as No. 2 in the UK and spent 72 weeks in total on the chart. Signing Off is now a Platinum album.

Despite great success in the UK, UB40's popularity in the United States was only established after they released Labour of Love, an album of cover songs, in 1983. The album reached No. 1 on the UK Albums Chart and No. 8 on the Billboard Top 200 in the US. The album featured the song, "Red Red Wine", a cover version of a Neil Diamond song.

Their most successful worldwide single release is the cover of the Elvis Presleyballad "(I Can't Help) Falling In Love With You" which was the main title to the 1993 Sharon Stonemovie Sliver and was a number one hit across Europe and in the U.S.

On 24 January 2008 it was announced that Ali Campbell would be leaving the group after 30 years. It was originally stated that this was in order for Campbell to concentrate on solo projects, but Campbell later said he was leaving due to "management difficulties". Keyboard player Michael Virtue followed Campbell.

The band's new album, Twentyfourseven, UB40's last with the original lineup, was a free insert in The Mail on Sunday's 4 May 2008 issue.. The full 17 track version was released on 16 June 2008, but failed to go top 75 in the UK. This is a first for UB40, as all the official albums have previously gone Top 50 on the UK Albums Chart. The band completed a UK Tour in July 2008 and is already recording Labour of Love IV.

UB40 is one of the most successful reggae acts of all time in terms of record sales (over 70 million), chart positions and touring schedule. During their three-decade long career, they have been performing sell-out shows worldwide and headlining the Reggae Sunsplash music festival in Jamaica, as well as spreading reggae to Russia and South America, among others.