From Little League International's "History of Little League" page.
Little League’s roots extend as far as baseball’s history itself – even into the 18th century.
Soldiers of the Continental Army played ball at Valley Forge during the American Revolution. U.S. citizens played more modern versions of the British games of cricket and rounders through the early 19th century, often called "town ball." In the 1840s, New Yorker Alexander Joy Cartwright and his acquaintances played a game they called "base ball" that was very similar to the game we know today. (Stories later arose saying Abner Doubleday invented the game, but historians generally regard the stories as myths.)
On June 19, 1846, in a contest many historians consider the first scheduled baseball game, Cartwright’s New York Knickerbocker Baseball Club was defeated by the New York Baseball Club, 23-1, in four innings.
During the American Civil War, soldiers on both sides played baseball to pass the time between battles. In 1869, the Cincinnati Red Stockings became the first openly professional baseball team. By the end of the 19th century, baseball was known as "America’s Pastime."
As early as the 1880s, leagues were formed for pre-teen children in New York, but they were affiliated with adult "club" teams and did not flourish. Children often played "pickup" baseball in streets or sandlots instead, and with substandard equipment. Cast-off bats and balls were taped and re-taped, and catcher’s equipment in children’s sizes was almost nonexistent.
In the 1920s, the American Legion formed a baseball program for teen-age boys that exists today. American schools also started baseball programs. But there was still a void for pre-teen boys who wanted to play in organized games. Other smaller programs cropped up from time to time, but did not catch on beyond local areas.
In 1938, a man named Carl Stotz hit upon the idea for an organized baseball league for the boys in his hometown of Williamsport, Pennsylvania. Carl had no sons of his own, but he often played ball with his young nephews, Jimmy and Major Gehron, and wanted a way to provide an organized program for them.
Carl gathered several of the neighborhood children and experimented with different types of equipment and different field dimensions during that summer. The program still did not have a name, and no games were played.
In 1939, Carl and his wife Grayce took the experiment a step further, enlisting the help of brothers George and Bert Bebble and their wives, Annabelle and Eloise, respectively. Carl, George and Bert were the managers of the first three teams: Lycoming Dairy, Lundy Lumber and Jumbo Pretzel. John and Peggy Lindemuth soon joined the group, with the eight volunteers making up the very first Little League board of directors.
Carl also talked to his friends in the community and came up with the name: Little League. His idea was to provide a wholesome program of baseball for the boys of Williamsport, as a way to teach them the ideals of sportsmanship, fair play and teamwork.
The sponsorships (the fee was $30) helped to pay for equipment and uniforms for 30 players. Since then, sponsorship of Little League both at the local league level and at the Headquarters level have helped to keep costs to parents to a minimum.
On June 6, 1939, in the very first Little League game ever played, Lundy Lumber (pictured to the left) defeated Lycoming Dairy, 23-8. Lycoming Dairy came back to win the season’s first-half title, and faced second-half champ Lundy Lumber in a best-of-three series. Lycoming Dairy won the final game of the series, 3-2.
In the following years, other programs emulating the first Little League sprung up. Boundaries for each league were established to ensure each league could thrive without worrying about neighboring programs "raiding" its players.
From those humble beginnings, Little League Baseball has become the world’s largest organized youth sports program. In the space of just six decades, Little League grew from three teams to nearly 200,000 teams, in all 50 U.S. states and more than 80 countries.
And the basic goal remains the same as it did in 1939, to give the children of the world a game that provides fundamental principles (sportsmanship, fair play and teamwork) they can use late in life to become good citizens.