DEST started to purchase a lot of land at Gusen in May 1938 in order to establish a twin concentration camp at Mauthausen and Gusen from the beginning, although construction of Concentration Camp Gusen was not started until autumn 1939. In the years 1938 and 1939, inmates of the nearby Mauthausen makeshift camp marched daily to the stone-quarries at Gusen which were more productive and more important for DEST than the Wienergraben Quarry.[3] In late 1939, the not yet finished Mauthausen camp, with its Wiener-Graben granite quarry, was already overcrowded with prisoners since Germany started the war against Poland in September 1939. Their numbers rose from 1,080 in late 1938 to over 3,000 a year later. About that time the construction of a new camp "for the Poles" began in Gusen, about 4.5 kilometres (2.8 mi) away. The new camp (later named Gusen I) became operational in May of 1940 while the Kastenhof- and Gusen-Quarries in the vicinity of that new concentration camp were operated with concentration camp inmates from Mauthausen before. The first inmates were put in the first two huts (No. 7 and 8) on 17 April 1940, while the first transport of prisoners - mostly from the camps in Dachau and Sachsenhausen - arrived on 25 May of the same year. The new camp at Gusen saved the inmates of Mauthausen the daily march between both locations.
Like nearby Mauthausen, the Gusen camp also used its inmates as slave labour in the granite quarries, but they also rented them out to various local businesses. In October 1941, several huts were separated from the Gusen sub-camp by barbed wire and turned into a separate Prisoner of War Labour Camp (German: Kriegsgefangenenarbeitslager). This camp had a large number of prisoners of war incarcerated, mostly Soviet officers. By 1942, the production capacity of both Mauthausen and Gusen had reached its peak. Gusen was expanded to include the central depot of the SS, where various goods, which had been seized from occupied territories, were sorted and then dispatched to Germany. Local quarries and businesses were in constant need of a new source of labour as more and more Germans were drafted into the Wehrmacht.
In March 1944, the former SS depot was converted to a new sub-camp, and was named Gusen II. Until the end of the war the depot served as an improvised concentration camp. The camp contained about 12,000 to 17,000 inmates, who were deprived of even the most basic facilities. In December 1944, another part of Gusen was opened in nearby Lungitz. Here, parts of a factory infrastructure were converted into the third sub-camp of Gusen — Gusen III. The rise in the number of sub-camps could not catch up with the rising number of inmates, which led to overcrowding of the huts in all of the sub-camps of Mauthausen-Gusen. From late 1940 to 1944, the number of inmates per bed rose from 2 to 4.