Montesa was formed in 1944 by Pedro Permanyer and Francisco Xavier "Paco" Bultó. Their first Montesa prototype was based upon the French Motobécane models of that time. Permanyer began to produce his own gas engines, which allowed for a new area in motorcycles to be explored and expanded into. Permanyer and Bultó teamed up in Barcelona and created a light-weight motorcycle. This led to the creation of a bike powered by a 95cc two-stroke engine with no rear suspension. Despite some setbacks, they sold 22 of these units in the first year of production. The next year, the partnership focused on production improvements and meeting the growing demand for their bike. As a successor to the previous model, Bultó designed a new 125cc roadster, which was tested in many of the trail-type rallies and semi-enduros that were popular in Spain at the time.
This model went on to enter the 1951 International Six Days Enduro. The bike was entered in by the factory, being ridden by Bultó and G. Cavestany. In the early 1950s, Montesa entered many races in the 125cc class of road racing. These bikes featured six-speed, bolt on gearboxes, in semi-unit construction, with all gears running on needle-roller bearings. By 1956, these Montesa 125s were very competitive and took second, third and fourth places in the Ultra-Lightweight race at the Isle of Man TT.
The most successful Montesa street bike of the 1950s was the Brio 80, of which more than 12,000 were produced. The success of the Brio and the other models, led to the opening of a new, larger factory in Espluges de Llobregat. The Brio 80 and Brio 90 models contained many new advances, such as moving the carburetor behind the cylinder, and a handbrake. However, a slump in the Spanish economy had forced Permanyer to cut back on the company's racing activities. Permanyer wanted to pull out of road racing, but Bultó insisted that they stay the course. In May 1958, chief designer Bultó left, taking with him several of Montesa's vital personnel to form a competitive firm, Bultaco. Permanyer had not only lost the brilliant designer Bultó, but also his 30% share of the company.