During the early 1960s, novelist Ken Kesey and the Merry Pranksters lived communally in California. Members included Beat Generation hero Neal Cassady, Ken Babbs, Carolyn Adams (aka Mountain Girl/Carolyn Garcia), Stewart Brand, Del Close, Paul Foster, George Walker, Sandy Lehmann-Haupt and others. Their early escapades were documented in Tom Wolfe's book The Electric Kool-Aid Acid Test. With Cassady at the wheel of a school bus named Further, the Merry Pranksters traveled across the United States to celebrate the publication of Kesey's novel Sometimes a Great Notion and to visit the 1964 World's Fair in New York City. The Merry Pranksters were known for using marijuana, amphetamines, and during their journey they "turned on" many people to these drugs. The Merry Pranksters filmed and audio taped their bus trips, creating an immersive multimedia experience that would later be presented to the public in the form of festivals and concerts. The Grateful Dead wrote a song about the Merry Pranksters' bus trips called "That's It for the Other One". During this period Greenwich Village in New York City and Berkeley, California anchored the American folk music circuit. Berkeley's two coffee houses, the Cabale Creamery and the Jabberwock, sponsored performances by folk music artists in a beat setting. In April 1963, Chandler A. Laughlin III, co-founder of the Cabale Creamery, established a kind of tribal, family identity among approximately fifty people who attended a traditional, all-night Native American peyote ceremony in a rural setting. This ceremony combined a psychedelic experience with traditional Native American spiritual values; these people went on to sponsor a unique genre of musical expression and performance at the Red Dog Saloon in the isolated, old-time mining town of Virginia City, Nevada.

            During the summer of 1965, Laughlin recruited much of the original talent that led to a unique amalgam of traditional folk music and the developing psychedelic rock scene. He and his cohorts created what became known as "The Red Dog Experience", featuring previously unknown musical acts — Grateful Dead, Jefferson Airplane, Big Brother and the Holding Company, Quicksilver Messenger Service, The Charlatans, and others — who played in the completely refurbished, intimate setting of Virginia City's Red Dog Saloon. There was no clear delineation between "performers" and "audience" in "The Red Dog Experience", during which music, psychedelic experimentation, a unique sense of personal style and Bill Ham's first primitive light shows combined to create a new sense of community. Laughlin and George Hunter of the Charlatans were true "proto-hippies", with their long hair, boots and outrageous clothing of 19th-century American (and Native American) heritage. LSD manufacturer Owsley Stanley lived in Berkeley during 1965 and provided much of the LSD that became a seminal part of the "Red Dog Experience", the early evolution of psychedelic rock and budding hippie culture. 

            When they returned to San Francisco, Red Dog participants Luria Castell, Ellen Harman and Alton Kelley created a collective called "The Family Dog." Modeled on their Red Dog experiences, on October 16, 1965, the Family Dog hosted "A Tribute to Dr. Strange" at Longshoreman's Hall. Attended by approximately 1,000 of the Bay Area's original "hippies", this was San Francisco's first psychedelic rock performance, costumed dance and light show, featuring Jefferson Airplane, The Great Society and The Marbles. Two other events followed before year's end, one at California Hall and one at the Matrix. After the first three Family Dog events, a much larger psychedelic event occurred at San Francisco's Longshoreman's Hall. Called "The Trips Festival", it took place on January 21–January 23, 1966, and was organized by Stewart Brand, Ken Kesey, Owsley Stanleyand others. Ten thousand people attended this sold-out event, with a thousand more turned away each night. 

         By February 1966, the Family Dog became Family Dog Productions under organizer Chet Helms, promoting happenings at the Avalon Ballroom and the Fillmore Auditorium in initial cooperation with Bill Graham. The Avalon Ballroom, the Fillmore Auditorium and other venues provided settings where participants could partake of the full psychedelic music experience. Bill Ham, who had pioneered the original Red Dog light shows, perfected his art of liquid light projection, which combined light shows and film projection and becamesynonymous with the San Francisco ballroom experience. The sense of style and costume that began at the Red Dog Saloon flourished when San Francisco's Fox Theater went out of business and hippies bought up its costume stock, reveling in the freedom to dress up for weekly musical performances at their favorite ballrooms. As San Francisco Chronicle music columnist Ralph J. Gleason put it, "They danced all night long, orgiastic, spontaneous and completely free form."

              Some of the earliest San Francisco hippies were former students at San Francisco State College who became intrigued by the developing psychedelic hippie music scene. These students joined the bands they loved, living communally in the large, inexpensiveVictorian apartments in the Haight-Ashbury. Young Americans around the country began moving to San Francisco, and by June 1966, around 15,000 hippies had moved into the Haight. The Charlatans, Jefferson Airplane, Big Brother and the Holding Company, and the Grateful Dead all moved to San Francisco's Haight-Ashbury neighborhood during this period. Activity centered around the Diggers, a guerrilla street theatre group that combined spontaneous street theatre, anarchistic action, and art happenings in their agenda to create a "free city". By late 1966, the Diggers opened free stores which simply gave away their stock, provided free food, distributed free drugs, gave away money, organized free music concerts, and performed works of political art.