The company was founded by Bob Bates and Mike Verdu, both veterans of the interactive fiction studio Infocom that shut down in 1989.

However, the company's expenses for graphics were rising without a similar increase in sales, causing Random House to exit the game industry.

In its final years, Legend fully pivoted to first-person shooters thanks to a growing relationship with Unreal developer Tim Sweeney and an acquisition by publisher GT Interactive.

We'd increase the accessibility of the games with great art and a menu-input system in the hope of drawing in a larger audience over time.

[9] Initially, the studio recruited former colleagues from Infocom for their experience, including programmer Mark Poesch,[3] and Steve Meretzky as an author and developer.

[11] Legend's debut title was Spellcasting 101: Sorcerers Get All the Girls, which expanded on Infocom's text-based adventures by adding graphics for each of the game's rooms.

[12] Meretzky described this as a "fusion of the depth and detail of Infocom games with a graphical presentation that would be more in keeping with what audiences circa 1990 demanded", which led to greater sales than their former studio had.

[14] Legend also benefitted from a strong relationship with traditional book publishers, securing licensing deals for their team's favorite authors while costs were still low.

[12][15] By the end of 1992, Legend were able to buy back American Systems Corporation's stake in the company,[9] and they were selling enough games to easily sustain themselves.

[15] The studio continued to expand their game engine, adapting to the popularity of the mouse and the increased media storage of the compact disc.

[11] The first project to take advantage of CD-ROM technology was Companions of Xanth, which signaled Legend's shift from traditional text adventures to a point-and-click interface.

[13] Programmer Michael Lindner had gained valuable design experience from working on Gateway, allowing him to create Companions of Xarth as a solo project.

[12] Adventure games were at their peak in the early 1990s, but the studio was facing difficult competition in the genre from Sierra On-Line and LucasArts, who had larger budgets and greater sales.

[3] Their relationship with Random House also encouraged them to work with more of their authors,[11] leading to the 1995 release of Shannara based on the eponymous novels by Terry Brooks.

[13] The same year, Legend released Mission Critical, which became notable for the role of Michael Dorn, of Star Trek: The Next Generation fame.

[13] Both Legend founders described this period as a "blessing and a curse", gaining higher graphical fidelity and simplified development on a single compact disc, but slowly watching their costs rise until their games were no longer commercially sustainable.

[3] In hindsight, Bates lamented the loss of the text interface, which removed the "magic" of having players see that the game recognized and rewarded surprising inputs.

[11] Bob Bates became the chief creative officer for Zynga, Glen Dahlgren became one of the lead designers on Star Trek Online, and Mark Poesch became a developer at AOL and Accenture.