The band was originally formed as The Dollar Bills in New Cross, London in 1962 by brothers Pete and John Cruickshank (born in 1943 and 1945 respectively in Calcutta, West Bengal, India). Tony McPhee (born 1944), the lead guitarist in an instrumental group called the Shcenuals, joined the group later that same year. McPhee steered them towards the blues and renamed them after a John Lee Hooker song, "Groundhog's Blues". John Cruickshank suggested they became John Lee's Groundhogs when they backed John Lee Hooker on his 1964 UK tour: they later supplemented Little Walter, Jimmy Reed and Champion Jack Dupree when they toured the UK. McPhee featured on Dupree's From New Orleans to Chicago (1966) alongside Eric Clapton. The Groundhogs issued "Shake It" b/w "Rock Me" on the Interphon record label in January 1965.
Their line-up on their first album, Scratchin' the Surface, released in November 1968, consisted of McPhee as singer and guitarist; bassist Peter Cruickshank (born 2 July 1945, in Calcutta, West Bengal, India); Ken Pustelnik on drums (born 13 March 1946 on a farm near Blairgowry, Angus, Scotland) and Steve Rye on harmonica (born 8 March 1946 in London – died 14 July 1992, in London). In 1969, the single "B.D.D." (Blind Deaf Dumb) flopped in the UK but hit number one in Lebanon.
The group's album releases Thank Christ For The Bomb (May 1970); Split (March 1971); and Who Will Save the World? The Mighty Groundhogs (March 1972), recorded as a trio without Rye, all reached the Top 10 in the UK Albums Chart. Split reached number 5, spending 27 weeks in the UK Albums Chart and achieved gold record status, while a single release from the album, "Cherry Red", was featured on BBC Television's Top of the Pops programme on 22 April 1971.
They supported The Rolling Stones on their 1971 British tour at the request of Mick Jagger and released an album of their live set on the Stones tour, recorded at Leeds University and called Live at Leeds. All these albums and live shows were performed by the classic power trio of Cruickshank, McPhee and Pustelnik. 1974's album Solid saw a last return to the charts.
After breaking up in 1976 they came back as a largely live act almost a decade later with a different line-up. At times in the 1990s, McPhee alternated two line-ups, one with a second guitarist. After years of performing and recording for a loyal following, original manager Roy Fisher put together a short-lived 'original line-up' to celebrate their fortieth anniversary. McPhee left the band again in order to pursue an acoustic career, leaving Cruickshank and Pustelnik to continue, subsequently forming 'The Groundhogs Rhythm Section' with invited frontmen, latterly with Eddie Martin, while McPhee embarked on a major tour in 2004 with Edgar Winter and Alvin Lee and issued an acoustic blues album Blues at Ten.
McPhee put together a new band in 2007, with long-time Groundhogs bassist Dave Anderson (ex-Hawkwind) and Marco Anderson on drums. This trio toured England in 2008 with Focus and Martin Turner's Wishbone Ash. The 2009 line-up of Tony McPhee's Groundhogs comprised McPhee, Anderson and previous long-term drummer Mick Jones. The Groundhogs Rhythm Section's latest recruits, Bob Bowles (guitar, vocals) and Jon Buckett (guitars, keyboards, vocals), joined Ken Pustelnik and Pete Cruickshank in February 2011. As of 2011, the new Groundhogs' lineup consists of McPhee, Anderson, Joanna Deacon (vocals), and Carl Stokes (drums).