Founded in 1981 by corporate alumni of Atari, Inc. and Mattel, its best-selling titles were Atlantis, Cosmic Ark, and Demon Attack.

[2] Founders included Bill Grubb, Bob Smith, Rob Fulop, and Denis Koble from Atari, Inc.,[3] Jim Goldberger, Dave Durran and Brian Dougherty from Mattel[4] as well as Pat Ransil [5] and Gary Kato.

[7] It was Grubb's goal to take Imagic public[8] and to eventually overtake Activision as the number one third-party video game publisher.

In 1983, the company laid off 40 of their 170 employees[13] but appeared at the 1984 Consumer Electronics Show with plans for four IBM PCjr games.

Packaging was distinctive due to the use of reflective silver on the boxes, with a tapered, ridged end intended for an easy grip.