The birth of bebop in the 1940's is often considered to mark the beginning of modern jazz. This style grew directly out of the small swing groups, but placed a much higher emphasis on technique and on more complex harmonies rather than on singable melodies. Much of the theory to be discussed later stems directly from innovations in this style. Alto saxophonist Charlie "Bird" Parker was the father of this movement, and trumpet player Dizzy Gillespie ("Diz") was his primary accomplice. Dizzy also led a big band, and helped introduce Afro-Cuban music, including rhythms such as the mambo, to American audiences, through his work with Cuban percussionists. But it was the quintet and other small group recordings featuring Diz and Bird that formed the foundation of bebop and most modern jazz.

While, as with previous styles, much use was made of the blues and popular songs of the day, including songs by George Gershwin and Cole Porter, the original compositions of the bebop players began to diverge from popular music for the first time, and in particular, bebop was not intended to be dance music. The compositions usually featured fast tempos and difficult eighth note runs. Many of the bebop standards are based on the chord progressions of other popular songs, such as "I Got Rhythm", "Cherokee", or "How High The Moon". The improvisations were based on scales implied by those chords, and the scales used included alterations such as the flatted fifth.

The development of bebop led to new approaches to accompanying as well as soloing. Drummers began to rely less on the bass drum and more on the ride cymbal and hi-hat. Bass players became responsible for keeping the pulse by playing almost exclusively a walking bass line consisting mostly of quarter notes while outlining the chord progression. Pianists were able to use a lighter touch, and in particular their left hands were no longer forced to define the beat or to play roots of chords. In addition, the modern jazz standard form became universal. Performers would play the melody to a piece (the head), often in unison, then take turns playing solos based on the chord progression of the piece, and finally play the head again. The technique of trading fours, in which soloists exchange four bar phrases with each other or with the drummer, also became commonplace. The standard quartet and quintet formats (piano, bass, drums; saxophone and/or trumpet) used in bebop have changed very little since the 1940's.

Many of the players from the previous generation helped pave the way for bebop. These musicians included Lester Young, Coleman Hawkins, Roy Eldridge, Charlie Christian, Jimmy Blanton, and Jo Jones. Young and Hawkins in particular are often considered two of the most important musicians in this effort. Other bebop notables include saxophonists Sonny Stitt and Lucky Thompson, trumpeters Fats Navarro, Kenny Dorham, and Miles Davis, pianists Bud Powell, Duke Jordan, Al Haig, and Thelonious Monk, vibraphonist Milt Jackson, bassists Oscar Pettiford, Tommy Potter, and Charles Mingus, and drummers Max Roach, Kenny Clarke, and Roy Haynes. Miles, Monk, and Mingus went on to further advances in the post-bebop eras, and their music will be discussed later.