The series began in 1938 when Guedel made an audition recording, and the following year, his concept of a comedy stunt show aired in Los Angeles as Pull Over, Neighbor, later reworked into All Aboard. Watching a bored, unreceptive audience listening to an after-dinner speaker, Guedel scribbled "People are funny, aren't they?" on a napkin, and he had his title.

In 1942, learning of a show that was canceled, he pitched People are Funny to NBC, and it went on the air April 10, 1942 with Art Baker as host. In a popular first-season stunt, a man was assigned to register a trained seal at the Knickerbocker Hotel while explaining that the seal was his girlfriend.

On October 1, 1943 Baker was replaced by Art Linkletter, who continued for the rest of the series. For a memorable stunt of 1945, Linkletter announced that $1000 would go to the first person to find one of 12 plastic balls floating in the Pacific. Two years later, an Ennylageban Island native claimed the prize.