Created in 1969 by Chris Wright and Terry Ellis (the name is an amalgam of their names) through a licensing deal with Chris Blackwell's Island Records based on the success of bands like Jethro Tull and Procol Harum, which were promoted by the label.

Towards the end of the 1970s, the Chrysalis offshoot 2Tone Records released bands such as the Specials, the Selector, Madness and the Beat.

In the 1980s, Chrysalis was at the forefront of the British New Romantic movement with bands like Ultravox and Spandau Ballet (on Reformation Records).

The Chrysalis Records label was sold to EMI in 1991 and now the label is only used for the record releases of Robbie Williams, with catalogue and artists such as Starsailor being shifted to the main EMI brands.