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The story of the Montauk Monster began with a July 23 article in a local newspaper, The Independent. Jenna Hewitt, 26, of Montauk, and three friends said they found the creature on July 12 at the Ditch Plains beach, two miles east of the district. The beach is a popular surfing spot at Rheinstein Estate Park owned by the Town of East Hampton.

Her color photograph ran in black and white, under the headline "The Hound of Bonacville" (a take-off on the name Bonackers, which refers to the natives of East Hampton, and "The Hound of the Baskervilles" which is a book in the Sherlock Holmes series). The light-hearted article speculated that the creature might be a turtle or some mutant experiment from the Plum Island Animal Disease Center before noting that Larry Penny, the East Hampton Natural Resources Director, had concluded it was a raccoon with its upper jaw missing. The article concluded that "someone took it away... to be buried... we hope." A local newspaper quoted an unidentified woman, who claimed that the animal was only the size of a cat, and had decomposed to a skeleton by the time of the press coverage. She would not identify its location for inspection. Hewitt's father denies claims that his daughter is keeping the body's location a secret.

Hewitt and her friends were interviewed on Plum-TV, a local cable television show.Alanna Navitski, an employee of Evolutionary Media Group in Los Angeles, California, passed a photo of the creature to Anna Holmes at Jezebel, claiming that a friend's sister saw the monster in Montauk. Holmes then passed it along to fellow Gawker Media website Gawker.com which gave it wide attention on July 29 under the headline "Dead Monster Washes Ashore in Montauk".

Cryptozoologist Loren Coleman at Cryptomundo first coined the name the "Montauk Monster" on July 29, 2008. The moniker was disseminated globally on the Internet in the following days. Photographs were widely circulated via email and weblogs, and the national media picked up on it raising speculation about the creature. The potential urban legend stature of the Montauk Monster was noted by Snopes.

Speculation in published reports included theories that the Montauk Monster might have been a turtle without its shell—even though a turtle's shell cannot be removed without damaging the spine—a dog, a raccoon, or perhaps a science experiment from the nearby government animal testing facility, the Plum Island Animal Disease Center. The creature's appearance was believed to have been altered through immersion in water for an extended period before coming to rest on the shore, making it difficult to identify.

William Wise, director of Stony Brook University's Living Marine Resources Institute, interpreted the photo along with a colleague; they deemed the creature a fake, the result of "someone who got very creative with latex." Wise discounted the following possibilities:

* Raccoon. ("The legs appear to be too long in proportion to the body.")
* Sea turtle. ("Sea turtles do not have teeth")
* Rodent. ("Rodents have two huge, curved incisor teeth in front of their mouths.")
* Dog or other canine such as a coyote. ("Prominent eye ridge and the feet" don't match.)
* Sheep. (Sheep don't have sharp teeth).

On August 1st, Gawker published pictures and X-ray images of a water rat, an Australian rodent with several similarities to the Montauk Monster, such as the "beak", tail, feet, and size. On the same day, Jeff Corwin appeared on Fox News and claimed that upon close inspection of the photograph, he feels sure the "monster" is merely a raccoon or dog that has decomposed slightly. This was backed up by Darren Naish, a British paleontologist, who examined the images and agreed that, if real, the creature was a raccoon. Naish says that "claims that the limb proportions of the Montauk carcass are unlike those of raccoons are not correct", and on his blog he furnishes an illustration of an intact raccoon corpse drawn over the corpse in the photograph.

On August 5, Fox Channel's Morning Show repeated speculation that the beast is a decayed corpse of a capybara, even though capybaras do not have tails. The next day, the same program reported that an unnamed man claimed that the animal's carcass had been stolen from his front yard.

It was suggested that the monster may have been a viral marketing campaign for The Secret Saturdays, a Cartoon Network television series featuring a group of cryptozoologists.