Penthouse was started in 1965 in England and began to be published in America in 1969. Penthouse was an attempt to compete with Hugh Hefner's Playboy on several levels. One approach Guccione took was offering editorial content that was more sensationalistic than Playboy. The magazine's writing was aimed more at the middlebrow reader than Hefner's upscale emphasis, with stories about political issues, government coverups, and scandals.

Due to a lack of money and resources, Guccione himself photographed most of the models for the magazine's early issues. Without professional training, Guccione applied his knowledge of painting to his photography, establishing the diffused, soft focus look that would become one of the trademarks of the magazine's pictorials. Guccione would sometimes take several days to complete a shoot, and, as this was during the days of the sexual revolution, he not surprisingly slept with a lot of his models.

As the magazine's success grew, Guccione openly embraced a life of luxury; his mansion is said to be the largest private residence in Manhattan. However, in contrast to Hugh Hefner's Playboy Mansion, whose phenomenal parties are the stuff of legend, life at Guccione's mansion was remarkably sedate even during the hedonistic 1970s. Reportedly Guccione once had a party guest thrown out simply for jumping into the swimming pool fully clothed.

The magazine's pictorials offered more sexually explicit content than was commonly seen in most aboveground "men's magazines" of the era, being the first to show female pubic hair and then full-frontal nudity. Penthouse has also, over the years, featured a number of authorized and unauthorized photos of celebrities such as Madonna and Vanessa Lynn Williams. In both cases the photos were taken earlier in their careers and later sold to Penthouse after Madonna and Williams became famous. In Williams' case, this forced her resignation as Miss America in 1984.

The famous "Penthouse Forum" column, which featured readers writing in about their (alleged) sexual experiences, was and remains one of the most popular features of Penthouse, with several books of the "letters" in publication.

Penthouse enjoyed a great deal of success in the 1970s and 1980s, and Guccione used some of this fortune to make movies ("Caligula" (1979) with Malcolm McDowell) and to create Omni (magazine), a science fiction and science fact publication, and Spin, a music magazine intended to compete with Rolling Stone by being more "edgy".

Guccione's English reared son, Bob Guccione Jr. (born 1956), was given editorship of Spin, but father and son soon fell out over editorial decisions, and Bob Jr. eventually found independent investors to continue the magazine. Father and son remain estranged, however, despite the father's recent health problems.

Penthouse was eventually outgunned by Larry Flynt's Hustler, which went even farther with both pictorials and editorial content than Guccione was willing to go. The magazine fell into a niche between Playboy's upper-class pretensions and Larry Flynt's no-holds-barred approach, and began to lose the impact it once had.

Numerous unwise investments on Guccione's part, including a never-built nuclear power plant and casino (which all told lost in excess of $100 million USD), added to his publishing empire's financial strain. Guccione's efforts to regain sales and get notoriety, which included attempts to get Monica Lewinsky to pose for the magazine and offering the Unabomber a free forum for his views, were not successful in reviving the magazine.

With the rise in online access to erotica and pornography in the 1990s, Penthouse's circulation numbers began to suffer even more. In 2003, General Media (the publishing company for Penthouse) declared bankruptcy, and Guccione himself resigned as chairman and CEO of Penthouse International, Inc. The magazine (as of December 2003) is still in publication and has an online presence; its circulation is estimated at 500,000, roughly 10f where it was in the magazine's heyday.