In tradition, kobolds were fey creatures associated with mischief, similar in appearance to gnomes or gremlins, often with the ability to become invisible (like the kobold Pumuckl popularized in a German TV-series).
However, for some unfathomable reason, the kobolds of D&D are little, scaly, humanoid lizards with snouts. What is the story behind that, if it is known?
Gary Gygax initially added the kobolds in the original without much description of their appearance. From a post by Gygax in an ENWorld forum thread:
Well, all i worked from was Germanic folklore about the forest "littel people" called kobolds. All the rest of the material in the game I made up to suit what i deemed as the needs of it. In short, the D&D kobolds are mostly the whole cloth of my imagination.
In othe words, Gygax made D&D's kobolds up for the purpose of creating some little guys that player characters could fight. Accuracy to folklore was a secondary concern. In the AD&D 1e Monster Manual, Artist Dave Sutherland decided on the kobolds' appearance, which influenced later artists. Gygax mentions it in another forum post:
It was indeed Dave sutherland that decided to give the kobolds a dog-like visage, likely because I had described gnolls as hyena-like. I had actually originally envisaged them as more impish ot countenence, but I went along with the depiction, as it made no difference to the game's play.
For D&D third edition, Todd Lockwood and Sam Wood were tasked with defining the look of many of the game's monsters, completely re-imagining some. We hear this in Dragon #266 (Dec 1999) p.30, "Countdown to Third Edition: Todd Lockwood and Sam Wood Reinvent the Look of the D&D Game":
When roleplaying R&D began work on the 3rd Edition game, they knew it would need a new look to go with the new rules. They turned to art director Jon Schindehette, who in turn tapped artist Todd Lookwood and Sam Wood for the daunting task of re-envisioning the D&D world.
In a now very obscure online interview (.doc) dated December 22, 1999, the artists describe this job:
Qualickar: Will ALL monsters be totally redrawn from scratch?
TSR_Sam: We are handling monsters on a case-by-case basis. Some need an overhaul. Some are pretty good as is. Some we could tweak to make them cooler. Some the designers have asked us to take another look at.
TSR_Todd: I believe so. I can't think of any exceptions. The thing about 3E is that is our opportunity to correct a lot of old oversights. Everything is going to be updated one way or another. Some things will change only a little, but others will be so cool you won't recognize them.
Finally, this early art of the kobold by Sam Wood, dated August 4, 1999, shows the first re-imagining of the kobolds as specifically reptilian, rather than more dog-like as had previously been imagined. This design appeared in the third edition Monster Manual (2000), and the reptilian kobolds have remained canonical ever since.
git blame for all the added spikes on dire animals.
– SevenSidedDie
Dec 30 '22 at 17:41
The poor old kobold has had an identity crisis that long pre-dates D&D.
In German folklore, the kobold was a house spirit of the 'catch one and it will do the dishes but also play practical jokes on you' type. Like the house-elf, boggart, goblin, or any number of annoying species in the Harry Potter universe.
Or, it's a spirit that lives in silver mines where its practical jokes tend to be more of the 'cause a cave-in that kills everyone' type. Or replace the silver ore with a pretty but useless metal called, naturally enough cobalt. Of course, this was before electricity and batteries where cobalt is not at all useless: which is why today its value is roughly 100 times that of silver.
They might be distant descendants of the kobalos from Greek mythology. Or maybe not - it's a long way in time, space and language from ancient Greece to medieval Germany.
The transition from fantasy fairy-tale to fantasy wargame came in Chainmail where kobolds are interchangeable with goblins. It actually says "GOBLINS (and Kobolds):" - the only difference is goblins hate dwarves and kobolds hate gnomes. Probably. Garry Gygax had a style of writing that left a lot of the heavy lifting up to the reader.
Kobold's have appeared in every edition of D&D starting with the white box (D&D0), including Basic.
They did not start out as "little, scaly, humanoid lizards with snouts" - in D&D0 they were "like goblins but weaker". Which, with a certain generosity of spirit, could be referring to the folkloric kobold.
In the AD&D (1e) Monster Manual we get:
The hide of kobolds runs from very dark rusty brown to a rusty black. They have no hair. Their eyes are reddish and their small horns are tan to white. They favor red or orange garb. Kobolds live for up to 135 years.
However, the image we have of them gives us a scaley, dog-like humanoid. Perhaps with a suggestion of dragon?
The AD&D 2nd edition Monstrous Compendium gave us:
Kobolds are a cowardly, sadistic race of short humanoids that vigorously contest the human and demi-human races for living space and food. They especially dislike gnomes whom they will attack on sight and in preference to all other enemies. Barely clearing three feet in height, kobolds have scaly hides that range from very dark rusty brown to a rusty black. They smell like a cross between damp dogs and stagnant water. Their eyes glow like a bright red spark and they have two small horns ranging from tan to white. Because of the kobolds' fondness for wearing raggedy garb of red and orange, their non-prehensile rat-like tails and their language (which sounds like small dogs yapping), these fell creatures are often not taken seriously by humans. This is often a fatal mistake, for what they lack in size and strength they make up in ferocity and tenacity.
The image, however, just looks stupid:
2nd edition did give us the flying kobold, or urd, which could be moving in a dragon direction.
3rd edition has the first explicit link between kobolds and dragons. The description is essentially the same as 2nd edition but it does add "... speak Draconic with voices that sound like yapping dogs." 3.5 edition rearranges the description but provides nothing new.
However, in 2005, Dragon No 332 published the "Ecology of the Kobold" which names them "Brethren of dragons" and tells a creation myth that the kobold god Kurtulmak was the first offspring of Tiamat, hatched early to protect her eggs while Tiamat recovered from wounds sustained battling thieves and that the kobold race was hatched from stolen eggs recovered by the god.
And there you have it.
Also, even though it's not directly related, one should never mention kobolds without referring to Tucker's Kobolds: "They graduated magna cum laude from the Sauron Institute for the Criminally Vicious."
Look at Sutherland's artwork, as shown in Dale M's answer, but also on the page preceding it (MM57: reproduced here (scroll down) or here (be sure to select the 1e tab)). The only thing 'dog-like' about these creatures is their nose, and perhaps the shape of their head (although that is being generous). The rest of them is clearly reptilian - they have spiny horns and are covered in scales.
While Gygax claimed that the appearance of the kobolds was determined by Sutherland (for example, in Quadratic Wizard's answer), it was Gygax who wrote the text of the entries in the Monster Manual, and the entry for kobolds states that their lairs contain "females equal to 50% of the total number [of males], young equal to 10% of the total number, and 30-300 eggs." None of the other humanoids in the Monster Manual are called out as having eggs (even the Lizard Men). Furthermore, their description specifies that they have "no hair", and that they live "up to 135 years". None of the other humanoids (at a time when when 'humanoids' meant evil and good races were demihumans) lived nearly as long, and among the humanoids lifespan was roughly proportional to body size. By itself this might not mean much, but it is consistent with the idea that mammalian humanoids lived faster and died younger, but as cold-blooded reptiles kobolds lived much longer.
Why Gygax made the decision, sometime between OD&D and First Edition, to represent kobolds as reptilian I don't know, and I am not sure there are any clear sources on that. But with the scales, eggs, lack of hair, and long lifespans it was clear, at least in the gaming circles I frequented back in the day, that kobolds were supposed to be reptilian.
As John Dallman points out in the comments, there is also the 1e depiction of Kurtulmak (Lesser God of Kobolds) that appeared in Deities and Demigods. Besides a considerably less dog-like face, he has kobold horns, scales "of steel", and "a tail with a poisonous stinger", all reptilian characteristics.
