Founded in 1891, as a partnership between four Puget Sound lumber companies, which each contributed a tugboat to the company.
The initial fleet of the Puget Sound Tug Boat Company consisted of the tug Tyee from the Puget Sound Commercial Company. The Wanderer from Port Blakely Mill Company. The Richard Holyoke from the Kendrick and Adams Company. And, the Tacoma from the Tacoma Mill Company.
In 1903, Pope & Talbot's Puget Mill Company became the controlling interest in the Puget Sound Tugboat Company.
In 1916, with sailing vessel traffic decreasing due to the opening of the Panama Canal, the Puget Sound Tugboat Company began divesting of its assets. Their last tug, Pioneer, was sold in 1926, and the company ceased to exist as a corporate entity by 1931.