Work on Tarsnap began in September 2006 when the author, Dr. Colin Percival, decided that he wanted a better online backup service than was available at that time. After slightly more than two years of development and private beta testing, Tarsnap officially entered public beta in November 2008, and attained profitability in February 2009. In September 2011, Tarsnap Backup Inc. was incorporated in British Columbia, Canada.

The Tarsnap client code is built around the open source libarchive archive handling library. While the Tarsnap code is not distributed under an open source license, Tarsnap contributes back to the open source community via bug fixes and enhancements to libarchive (40 commits and counting) and by releasing entirely new code where possible (e.g., the scrypt key derivation function and file encryption code).

At the present time, the Tarsnap service is provided using infrastructure from Amazon Web Services.

Dr. Colin Percival studied mathematics at Simon Fraser University, entering at age 13, before going on to a doctorate in Computing at Oxford University, where his thesis covered problems in string matching, data compression, and file synchronization.

In January 2004, Colin became a FreeBSD committer and a member of the FreeBSD Security Team; he became the Security Officer for FreeBSD in August 2005, a position which he held until May 2012. Aside from his work as FreeBSD Security Officer, he is probably best known in the FreeBSD community for his work on FreeBSD Update and Portsnap.

In addition to direct experience handling security issues via his experience as FreeBSD Security Officer, Dr. Percival has published several research papers in areas ranging from numerical analysis to cryptography, including the first published cryptographic attack against shared caches in Intel's "HyperThreaded" processors.