Data East was founded by Tetsuo Fukuda on April 20, 1976 as an electronic engineering company which focused on integrating interchangeable tapes inside arcade game devices, allowing video games operators to replace a game from a machine without having to replace the cabinet itself. Realizing the money that could be made within the interactive content, Data East began developing arcade video games in 1979 and established a U.S division, after most of their chief competitors like Sega and Taito had already established a market presence. While making games, Data East released a series of interchangeable systems compatible with their arcade games, notably the DECO Cassette System and the Multi Conversion Kit, but these products would soon become infamous among their users due to their numerous technical problems. By 1985 Data East would shift away from interchangeability to concentrate themselves on video games only.

Data East proved to be one of the more successful and long-lasting companies in the business, surviving the video game crash of 1983 in reasonably good shape and going on to release dozens of games for both arcade and home console systems over the next two decades. Some of the most famous games from their 1980s heyday included Karate Champ, Heavy Barrel, Burgertime, Bad Dudes, Sly Spy, RoboCop, Bump 'n' Jump, and Ring King. Data East also purchased licenses to manufacture and sell arcade games created by other companies (in exchange for a cut of the profits, of course). Their most successful licensed games included Kid Niki: Radical Ninja, Kung Fu Master and Vigilante, all licensed from Irem, and Commando, licensed from Capcom. They had a brief stint as a Neo-Geo arcade licensee in the mid-1990s.

Data East also made pinball tables from 1987 through 1996, and included innovations such as the first pinball to have stereo sound, the first usage of a small Dot matrix display in Checkpoint along with the first usage of a big DMD (192x64) in Maverick. In designing pinball machines they showed a strong preference for using high-profile (but expensive) licensed properties, rather than creating totally original machines, which did not help the financial difficulties the company began experiencing from 1990 on. Some of the properties that Data East licensed for their pinball tables included Guns N' Roses, Star Wars, Back to the Future, Batman, RoboCop, The Simpsons, and Teenage Mutant Ninja Turtles. Data East is the only company that manufactured custom pinball games (i.e. for Aaron Spelling, the movie Richie Rich or Michael Jordan), though these were bascially mods of existing or soon to be released pinball machines (f.e. Lethal Weapon 3). The pinball division was created in 1985 by purchasing the pinball division of Stern Electronics and its factory and assets. Amidst plummeting sales across the entire pinball market, Data East chose to exit the pinball business and sold the factory to Sega in 1996. The company's American video game division, Data East USA, had already been transferred to Sega as part of a debt settlement in 1994 ( thus ending the existence of Data East outside Japan ). The pinball factory changed hands one more time, with Gary Stern purchasing the factory outright in 1999 and renaming it Stern Pinball.

Unable to escape their mounting financial problems, Data East filed for reorganization in 1999 and resumed making video games. For the following three and a half years, Data East sold negative ion generators and licensed some of their old games to other companies; all of this in hope of collecting enough money to be able to make video games again and return to the competition. Nonetheless, the company's restructuring efforts weren't enough to put back the financial problems brought by the 1990s and in April 2003 Data East filed for bankruptcy and were finally declared bankrupt by a Tokyo district court on June 25, 2003.

Most of Data East's intellectual properties were acquired in February 2004 by G-mode, a Japanese mobile game content provider. A few others were acquired by Paon Corporation, Ltd. From there, G-mode has slowly been releasing Data East Games in Japan and in the international market. Major titles such as BurgerTime, Magical Drop and Karate Champ are currently out in the market today. G-mode is currently looking to license out Data East games to keep these retro games alive.