The observatory was founded in December 1939 by Karl-Otto Kiepenheuer as a solar observatory for the Luftwaffe. The recording of solar activity was supposed to enable the most accurate forecast possible of the optimal frequencies used for military communications. After the Second World War the observatory was funded by the US forces for the same purpose. Since 1949 the facility has belonged to the University of Munich. In the 1960s the observatory was enhanced with a coronagraph, a device that enabled research to be carried out on the atmosphere of the sun. Due to increasing air pollution and research priorities switching back to night-time astronomy, scientific observations of the sun were ceased in the 1980s. Since 1988 the facility has become purely an observatory; the dome of the coronograph is only used today for viewing purposes. Searches were conducted from the Wendelstein for extrasolar planets by evaluating occultations and research is carried out on variable stars in dwarf galaxies using an 80-cm telescope and CCD cameras. In 2012, the 80-cm telescope was replaced by an instrument with a two-metre aperture.