- For the third Golden Joystick Awards (held in 1986), The Way of the Exploding Fist takes Game of the Year for 1985.
- The sixth Arcade Awards are held, for games released during 1983-1984, with Star Wars winning best arcade game, Space Shuttle best console game, Ultima III: Exodus best computer game, and Zaxxon best standalone game.
- August, the final issue of Electronic Games magazine is published.
- New companies: Bethesda, Cinemaware. Codemasters, Square Co., Titus, Westwood Studios
- Defunct: Adventure International, Bug-Byte, Edu-Ware, RDI Video Systems
- David Mullich and several other laid-off employees from Edu-Ware form Electric Transit, the first company to join Electronic Arts' new affiliated publisher program.
- January, Konami releases Yie Ar Kung-Fu, which lays the foundations for modern fighting games.
- March, Tehkan releases Gridiron Fight, an American football sports game featuring the use of dual trackball controls.
- April, Atari Games releases Paperboy with a controller modeled after bicycle handlebars,
- May, Namco releases Metro-Cross.
- May, Konami releases Gradius in Japan (called Nemesis elsewhere).
- May, Capcom releases Commando, a vertically-scrolling on-foot shooter which inspires many games with similar themes and gameplay.
- July, Namco releases Baraduke (Alien Sector in the US).
- July: Sega releases Hang-On by Yu Suzuki and AM2. It is the first of Sega's Super Scaler games. Its motorbike cabinet is controlled using the body, starting a "Taikan" trend of motion controlled hydraulic cabinets in arcades some two decades before motion controls become popular on video game consoles.
- September 19, Capcom releases Ghosts 'n Goblins, originally titled Makaimura in Japan. It was one of the most popular arcade games of the year, and went on to spawn a series of later games.
- September 20, Namco releases Motos.
- October: Sega releases Space Harrier by Yu Suzuki and AM2. It further develops the pseudo-3D sprite-scaling graphics of Hang-On and uses an analog flight stick for movement.
- October, Atari Games releases Gauntlet. Based on the lesser known Atari 8-bit game Dandy, Gauntlet is highly profitable, letting players insert additional quarters for more health.
- December, Namco releases Sky Kid, a side-scrolling shooter allowing two players simultaneously.
- Tehkan releases Tehkan World Cup, which lays the foundations for association football/soccer games with an above view of the field.
- September 9, Namco releases Battle City for the Famicom (which is based on their older 1980 arcade game of Tank Battalion).
- September 13, Nintendo releases Super Mario Bros., which eventually sells 40 million copies, making it the best-selling video game of all time until 2008. It introduces Princess Peach (who was originally known as "Princess Toadstool"), Toad and Bowser to the Mario series, as well as common enemies and powerups including Goombas, Koopas, Super Mushrooms (which were originally known as "Magic Mushrooms"), Fire Flowers and Starmen. It popularizes the side-scrolling platformer format.
- October 18, Nintendo releases Duck Hunt for the Famicom.
- April, Game Arts releases Thexder.
- September 16, Origin Systems releases Ultima IV: Quest of the Avatar, which popularizes the use of dynamic morality systems in computer role-playing games.
- October 27, Nihon Falcom releases Dragon Slayer II: Xanadu, a foundation for the action role-playing game genre, combining real-time action combat with character statistics, gameplay elements such as a Karma morality meter, and proto-Metroidvania style exploration.
- T&E Soft releases Hydlide II: Shine of Darkness, an early action role-playing game that also features an alignment morality meter.
- Brøderbund releases Where in the World is Carmen Sandiego?, the first game in the Carmen Sandiego series.
- Electronic Arts releases Racing Destruction Set for the Commodore 64 and Atari 8-bit family.
- Elite Systems UK releases Roller Coaster, a platformer.
- Bubble Bus Software releases action-adventure game Starquake.
- Tau Ceti is published in the UK.
- The Learning Company releases The Oregon Trail on the Apple II.
- Novagen releases 3D wireframe game Mercenary for the Atari 8-bit family.
- July, Sega releases the Sega Space Harrier arcade hardware (also known as Sega Hang-On), the first of Sega's "Super Scaler" arcade system boards that allow pseudo-3D sprite-scaling at high frame rates. It displays 6144 colors on screen, out of a 32,768 color palette.
- Namco begins development on the Namco System 21 around this time, as the first arcade board dedicated to 3D polygon graphics.
- January, Commodore releases their final 8-bit computer, the Commodore 128.
- June, Atari Corporation releases the 520ST, the first personal computer with a bit-mapped, color GUI.
- July 23, Commodore releases the Amiga 1000 personal computer, the first in the Amiga family. It was not widely available until 1986.
- Atari replaces previous models in the Atari 8-bit family with the 65XE and 130XE, the latter of which has 128K bank-switched RAM.
- Discontinued: Coleco Adam, Commodore VIC-20
- July 26, Nintendo releases the Family Computer Robot, a peripheral for their Family Computer (Famicom) home video game console, in Japan.
- October 18, the Nintendo Entertainment System (NES) home video game console, the export version of the Famicom, is launched for a limited test market in the United States, along with the R.O.B. (Robotic Operating Buddy) peripheral.
- October 20, the Sega Mark III home video game console is launched in Japan.
- ColecoVision is discontinued.
- INTV Corporation releases the INTV III console.
- Telegames releases the Dina, a ColecoVision clone.
- GameCenter CX - 1st Season, Episode 09. Retrieved on September 19, 2009
- "Tehkan World Cup - Videogame by Tehkan". Arcade-museum.com. Retrieved February 28, 2013.
- "Guinness World Records Gamer's Edition – Nintendo Records". Guinness World Records. Archived from the original on December 31, 2008. Retrieved December 5, 2008.
- Kaiser, Rowan (January 26, 2012). "Ultima: Most. Important. Game Series. Ever". Joystiq. Retrieved March 26, 2013.
- "Xanadu Next home page". Retrieved September 8, 2008. (Translation)
- Jeremy Parish. "Metroidvania". Metroidvania.com. GameSpite.net. Retrieved March 25, 2011.
- Kurt Kalata & Robert Greene. "Hydlide". Hardcore Gaming 101. Retrieved May 1, 2011.
- IGN Presents the History of SEGA: World War, IGN
- https://github.com/mamedev/mame/tree/master/src/mame/drivers/segahang.c[permanent dead link]
- "Archived copy". Archived from the original on January 25, 2016. Retrieved February 9, 2016.CS1 maint: archived copy as title (link)