After briefly attending Blackburn College in Carlinville, Illinois and subsequently transferring to The Evergreen State College in Washington State, Pavitt started a fanzine entitled Subterranean Pop in Olympia, Washington in 1980, about American independent rock bands. Three cassette compilations were released through the fanzine. In 1983, Pavitt moved to Seattle and started a record store, Fallout, as well as writing a Sub Pop column for The Rocket, and hosting an independent-label specialty show on KCMU. 1986 saw the release of Sub Pop's (the "-terranean" was dropped earlier from the name) first LP: the Sub Pop 100. Green River's Dry As a Bone EP followed in 1987.
Pavitt initially met Jonathan Poneman in 1986, when Poneman invited Pavitt for an on-air interview on KCMU, to promote Sub Pop 100. In 1987, Kim Thayil of Soundgarden suggested that the two join forces. Pavitt and Thayil had both attended Rich East High School in Park Forest, Illinois in the mid-1970s. Subsequently Soundgarden's Screaming Life EP was released, and the grunge phenomenon quickly followed.
He is also credited with signing Nirvana to Sub Pop. He became a multimillionaire from this move. In 1996, Pavitt parted company with Sub Pop records. Contributing factors in the decision to leave are reported to have been disagreements between Pavitt and fellow Sub Pop partner Johnathan Poneman, on the direction the label's future should take; also the apparent unease Pavitt felt with the change in the business environment following the selling of 49% of Sub-Pop's stake to Warner Bros Records contributed to his decision to part ways with Sub Pop.