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Baja Bugs originated in Southern California in the late 1960s as an inexpensive answer to the successful Volkswagen-based dune buggies of the mid-1960s, especially the Meyers Manx.
The building of the first Baja Bug is generally credited to Gary Emory of Parts Obsolete, circa 1968. The first Baja Bug in racing is credited to Dave Deal, the Californian cartoonist, in the Mexican 1000 of 1968 in Baja California. The first fiberglass Baja kit (bug eye kit) was not introduced until 1969 by the Miller-Havens company.
In the early days before fiberglass body panels became available, enthusiast and racers simply made their own modification to both the body and mechanicals of a stock VW to develop a machine suited to harsh, off-road environments. The metal fenders and front and rear aprons of the car would be partially cut away to allow more for ground clearance and suspension travel. This came to be known as a "Cut Baja".  More power was attained by fitting dual port heads and modifying fuel injection systems from Volkswagen Type 3 engines to work on the Type 1 Beetle engine.