[5] The fantasy-themed game is set in the fictional town of Torchlight and the expansive caverns and dungeons nearby, which adventurers explore to collect valuable loot and battle hordes of monsters.

Runic Games and World Domination Industries developed a port for Xbox Live Arcade which was released on March 9, 2011.

[14] The player controls a lone hero who explores a series of randomized dungeons, fighting large numbers of enemies and collecting equipment, gold, and other loot.

The game also features a single town which serves as a hub, to which the player character can periodically return to buy and sell items to NPC vendors and obtain quests.

[15] As the protagonist delves into the dungeon, a series of quests are presented which involve battling unique bosses that advance the main storyline.

[17] This approach to level generation is intended to create dungeons with more purposeful design, instead of environments that simply look like "crossword puzzles that have been extruded upwards.

The mining boomtown called Torchlight is built above a rich vein of Ember, and adventurers are drawn to the town seeking the magical substance and the enchanted items it creates.

However, as the player character explores the dungeons below Torchlight, they discover that Ember has a corrupting influence which led to the fall of past civilizations and endangers those who use it in the present.

[6][16][25] The player character arrives in town and is recruited by Syl, a sage who is searching for her mentor, an alchemist named Master Alric, who has disappeared in the nearby mine.

At the bottom of the mine tunnels, the player finds a passage into older, crypt-like chambers below, eventually discovering that the entire dungeon is a "layer cake of ruined civilizations.

After fighting a series of monsters and henchmen to reach the bottom of the dungeon, the player must face Alric and an ancient creature named Ordrak, the source of the Ember's corruption.

"[31] The team chose to give the game world a lighter fantasy tone to make it more inviting, rather than utilizing a "dark and gritty" style.

[34] In August 2010, Runic CEO Max Schaefer revealed that the game was in development for the PlayStation 3 and Xbox 360, aiming for release by the end of the year.

[40] Writing for RPGamer, staff reviewer Anna Marie Neufeld praised Torchlight's "phenomenal music and great art direction" as well as its addictive combat but criticized the game's storyline as shallow.

[47] Rock, Paper, Shotgun reviewer John Walker found the core gameplay to be a highly focused and engaging refinement of the dungeon crawl genre, albeit one with a "tissue-thin" story and quests.

[50] In his review in Game Informer, Adam Biessener listed responsive controls, attractive animations and effects, and clever enemy designs as some qualities that set Torchlight above most other action RPGs.

[49] On August 4, 2010 Runic Games announced Torchlight II, a continuation of the story, featuring a co-op mode, new player characters, an "overworld" with multiple outdoor areas, and a new user interface.

Runic entered into a partnership with Chinese online game developer and operator Perfect World Co., Ltd. to publish the MMO worldwide.