It was initially released on Steam for Microsoft Windows on 4 April 2019, and support for macOS and Linux was added in June that year.

The developers were inspired by a mutual love of city-building games, and chose to embrace simplicity in designing Islanders because of the limitations of working with a small team.

[7][8] Buildings can be rotated to fit into position, but once placed, cannot be removed or built over, so careful placement and forward planning are important to maximize the score.

[5][8] This process gradually unlocks more advanced building types such as gold mines and resorts, which may have more difficult placement criteria but higher scoring potential.

[15] The game intentionally omits many features common to city-builders, such as resource accumulation, traffic management, and technology research.

[17] Later in their second year, they worked with another student, Shahriar Shahrabi, to develop minimalist wingsuit flight simulator Superflight, founding Grizzly Games as a means to release it.

The team was inspired by their mutual childhood interest in city-building games like Anno, The Settlers, and SimCity, which they enjoyed but found complicated.

[19] Seeking to provide a streamlined experience focused solely on building, the team decided to move forward with the concept that became Islanders.

In order to test game mechanics, the developers created a script that quickly assembled new levels from pre-generated blocks.

[17] When developing the mechanics of the game, Allmenröder explained that his team constantly discussed simplifying the systems they were implementing: "Every time we made a decision, we asked ourselves: Can we make it simpler?

Early updates added new island types and new buildings, such as seaweed farms and monuments, as well as new gameplay features, such as a photo mode that removes the user interface elements to allow for uncluttered screenshots.

[17][22] The final major update was made in June 2019, adding support for macOS and Linux, a sandbox mode which removes the scoring mechanic and provides the players with an unlimited selection of buildings, and an undo button to allow players in original game mode to remove the last building placed.

[27] On 23 May 2022, Coatsink announced that it had acquired Islanders from Grizzly Games, with an eye towards creating downloadable content, releasing versions for additional platforms, and possibly developing a sequel.

[31] Reviewers praised the game's intentionally simple mechanics, as well as its minimalist, low-poly visual aesthetic and relaxing soundtrack.

[3][4][13] Several reviewers found that the process of strategically placing buildings reminded them of carefully directing falling blocks in the puzzle game Tetris.

French gaming site Millenium [fr] appreciated the way the color palettes and shapes suited the gameplay.

[16] Samuel Guglielmo of TechRaptor found that the art style prompted him to place buildings "in locations that looked pretty" even if it meant scoring fewer points.

[33] The reviewer from Edge described going through a similar "battle between efficiency and beauty," but found that the "crisp geometric style" of the graphics meant that the islands still looked attractive even when they focused on scoring over aesthetics.

[5] Benja Hiller of German indie magazine Welcome to Last Week enjoyed the lack of human characters: "there are no annoying people.

"[14] At Eurogamer, Christian Donlan had similar thoughts, asking "Is it nice to see one of the game's gorgeous low-poly islands filled with buildings, or is it a crime against nature?"

[7] Reviewing the console version in 2021 for Nintendo Life, Roland Ingram wrote "Islanders is an elucidation of how games build meaning from abstract systems.

[42] The reviewer from Edge magazine noted that the game can be "a little persnickety about placement" of buildings, and Alessandro Barbosa of Critical Hit disliked the lack of an undo button at launch.

[44] Critics generally found that the relaxed gameplay and low-poly graphics translated well to the Nintendo Switch in both docked and handheld mode.

Bunting argues that during these periods, people had increased free time and needed distraction from stress, and turned to relaxing minimalist games as a solution.