Atari had some financial trouble in the 1970s. This eventually led Nolan Bushnell to sell the arcade subsidiary of Atari to Namco. The head of Namco, Masaya Nakamura, sold the Atari games subsidiary to Hide Nakajima and Time Warner in 1987.

At the time, the Nintendo market began to catch on within the United States. A previous agreement between Warner and Jack Tramiel prevented Atari Games from entering the console market. Nakajima, Dan Van Elderen, Randy Broweleit, and Dennis Wood decided to form a subsidiary, which would allow them to produce Nintendo games. Tengen was born.

By 1988 Tengen had a license to produce games for the Nintendo. During the summer Consumer Electronics Show of 1988, Tengen displayed their first three games: Gauntlet, Pac Man, and RBI Baseball. Unfortunately there was a ROM chip shortage that year and Tengen received less then 1/4 of their order of chips.

Tengen put a group of engineers onto the task of cracking the NES lockout chip. After several failed attempts they were successful with their "Rabbit" chip. Unfortunately for Tengen, they had also obtained copies of Nintendo's lockout chip source code. A lawyer obtained a copy of the patent to make sure that Tengen wasn't infringing with their games. Tengen would later claim that they had their chip developed before they even obtained the source code. Whatever the case may be, this would hurt Tengen a few years later.

By December of 1988, Tengen sued Nintendo for using a monopolistic and exclusionary business practice. Nintendo counter-sued claiming that Tengen entered into the licensing agreement in an attempt to gain the knowledge and marketing techniques necessary to compete with Nintendo. The Rabbit chip fiasco was soon discovered and by 1991 Tengen would have to halt the production of their games. Tengen came to an agreement allowing them to continue producing Nintendo games until the verdict of the suit was announced. By 1992 Tengen would stop producing their NES games. Tengen went back to becoming a licensee, and they would produce several games for Sega.

Another big kicker for Tengen was the Tetris incident. In 1988, Robert Stein obtained a license to port Tetris to various computer systems. Stein (of Mirrorsoft) sold these rights to Tengen, which then started to work on their Tetris game.

Nintendo had wanted the Tetris rights for themselves. They had an upcoming Gameboy to produce for, and Tetris was just the thing. By March of 1989, Nintendo received the rights to produce console and hand held versions of Tetris. In April Tengen sues Nintendo over the Tetris rights and Nintendo immediately counter-sues. By mid-May Tengen releases their version of Tetris.

In early June the trials begin. The outcome of the case depended on whether the Nintendo was a computer or a videogame console (remember, Stein had the rights to produce Tetris on the computer). There was evidence supporting both sides but in the end the courts sided with Nintendo. Tengen's Tetris was torn from shelves and Nintendo began the production of their Tetris games.

Sometime during 1990 Tengen contracted with Novotrade to program Airball for the Nintendo. Airball was a Solstice-like game that was quite popular for the computer. Novotrade completed the game, though it required the use of a custom circuit board, which would raise the production (and sale) price. Airball was dropped. An interesting tidbit to mention, Novotrade also programmed SEI's Impossible Mission II game for the Nintendo.

Another game that went unreleased was Police Academy. Tengen put Steve Woita in charge of designing the game. Police Academy was about halfway done when Tengen told Steve to stop the project. Mark Phoenix was then put in charge of PA. A second version of Police Academy began development. Version two was an average platformer, which didn't test too well either. The Police Academy game was soon dropped.

Some development had also begun on converting the Xybots arcade game over to the Nintendo. Erich Horn built the engine, Lisa Ching programmed the majority of the levels, and Steve Woita did some miscellaneous stuff for the game. Some hidden screens were added into the game, including the symbol from Clash, a musical band. Due to the declining NES market, poor test results, and a confusing game perspective, Xybots went unreleased.

The two works of Simon Nicol didn't see the light of day either. Technocop and Licence to Kill were both finished. LtK was based off of the movie of the same name; it was probably a port of the old DOS game Licence to Kill. Technocop used a standard banking chip with no special modifications. These games were both made under Domark, the company which did Tengen's European distribution.

Although Tengen ran into many problems during their journey, some of the guys working there had some fun times. Dave O'Riva and LX Rudis used the pseudonym "BugSuk" when composing music for the games. Several people at Tengen believed that speed-metal couldn't be done on a console machine though this was proven incorrect after Dave and LX did the music for the Klax game.

Blob Ball also shows that the programmers tried to have fun with what they were doing. Dave O'Riva had wanted to make a Pong-like game on the Klax cartridge and Blob Ball was born. Several people on the Tengen team were surprised that the game was shipped with Blob Ball intact!

From 1987 to 1992, Tengen released over 20 games for the NES, had plans to release over 25. Below is a list of known titles that were worked on for the NES. Tengen had also released many games for many other platforms.