The team's roots can be traced back to 1932 when the original amateur Nuggets were formed as a member of the Amateur Athletic Union. Led by player-coach Jack McCracken, the Nuggets were one of the most powerful amateur athletic basketball teams in the country, winning the 1939 AAU championship and losing the 1940 championship to the Phillips 66ers. Not playing professionally, its players were given extra jobs by team sponsors. Featuring players such as McCracken, Ace Gruenig and Vince Boryla, the Nuggets continued as an AAU power throughout their existence, and the AAU has been credited by historians for helping put Denver on the national sports map.
After the 1947–48 season, the Nuggets decided to step out of their amateur status. Rather than join the National Industrial Basketball League (NIBL), which was founded in 1947 and remained amateur, the Nuggets' general manager, Hal Davis, secured a franchise in the nine-team National Basketball League to play in the 1948–49 season. The Nuggets finished last in the Western Division in the 1948–49 season.
In the 1949–50 season, the team played in the newly-formed National Basketball Association (NBA). The Nuggets were led by player-coach Jimmy Darden, a star shooting guard who joined the Nuggets after leaving the Army as a World War II veteran in 1946. The Nuggets played one season in the NBA, compiling an 11–51 record in the Western Division, and were then disbanded in 1950. Briefly, in the 1950–51 season, the Denver Refiners played in the National Professional Basketball League (NPBL), which was made up of franchises that left the NBA. That team moved to become the Evansville Agogans the last six games of the season. After the demise of the Nuggets and the Refiners, Colorado was without any major league sports teams until the 's Denver Broncos in 1960.