Atari released a stand-up coin-operated arcade game called Touch Me in 1974 that utilized four buttons and emitted four corresponding tones, requiring the player to repeat an ever-lengthening sequence. Three mistakes and the player lost.

Ralph Baer (creator of the Magnavox Odyssey, released in 1972) and Howard Morrison saw Touch Me at the annual Music Operators of America convention in Chicago in November 1976. Ralph's impression: "Nice game idea, terrible execution... visually lousy, miserable sounds."

They realized the core game concept would make a great handheld game and pitched the idea to Marvin Glass & Associates, an independent toy design firm. The go-ahead was given to work on the project, renamed Follow Me.

Lenny Cope, one of Baer's partners, wrote the firmware for a Texas Instruments TMS1000 microprocessor using a Teletype terminal dialed in to a mainframe computer in Pennsylvania that held the TI software tool for the device.

Baer selected four notes from the bugle (in the third and fourth octaves): G4, C4, E4 and G3, to make the sounds more pleasing to the ear regardless of the order in which they are played.

After filing for a patent in July 1977 (Baer and Morrison were awarded U.S. patent 4,207,087 for "a microcomputer controlled game"), they demonstrated a prototype to Milton Bradley, who licensed the game and renamed it Simon (after the children's game Simon Says).

From the patent:

A game utilizes a microprocessor for controlling the play of one or more games in which a participant may play against the machine or against another participant. When played against the machine, the machine generates a random sequence of tones which must be accurately repeated by the participant. The machine then repeats the latest sequence and adds another tone to the sequence. The process is repeated until the participant makes an error, or until the sequence reaches a predetermined length. When played between two or more participants, each participant increases the length of the sequence until one of the participants makes an error whereupon the machine "eliminates" the player. The machine keeps track of the longest correct sequence and indicates which participant is in error.

Doug Montague received U.S. design patent USD253786S for the "Electronic game housing" of Simon.

Simon was officially presented to the public on May 18, 1978 during a late-night event at Studio 54 in New York.

After four years on the market, at the end of 1982 more than 10 million Simon games had been sold.