The Black Sheep Brewery was established by Paul Theakston in 1991. Following a successful launch as a Business Expansion Scheme, it became a public limited company (plc) in 1992. Paul Theakston had been managing director of Theakstons brewery, also in Masham, since 1968. He began at the age of 23, taking over from his father, Frank Theakston.
Theakstons brewery was bought by Matthew Brown following disagreements between members of the family and other shareholders, and in 1987 Matthew Brown was in turn taken over by Scottish and Newcastle. Paul Theakston left in 1988, and after a hiatus of more than a year purchased the North Yorkshire Malt Roasting Company, originally part of the former Lightfoot's brewery site, from an animal feed company, in order to start a new brewery in Masham.
Theakston wanted to use the Lightfoot name to bring back an old brewing tradition; however it was discovered that this name had already been trademarked by Scottish and Newcastle. The associations of Masham with sheep led Theakston to come up with the name "Sheep Brewery" which rapidly became "Black Sheep" at his wife's suggestion.The first and original Black Sheep Best Bitter was sold at the Bruce Arms by its Landlord, David Young.
The brewery produces a range of well-hopped bitters, to distinguish itself from Theakston's range of fruity and yeasty beers. The brewery quickly became successful after formation, and now produces over 75,000 barrels a year. The brewery has capitalised on its popularity by converting unused parts of the original maltings into a visitors centre to promote visits to the brewery itself.