Marble Madness was developed by Atari Games, with Mark Cerny as the lead designer and Bob Flanagan as the software engineer. Both Cerny and Flanagan handled programming the game. It uses the Atari System 1 hardware, an interchangeable system of circuit boards, control panels, and artwork. The game features pixel graphics on a 19 inch Electrohome G07 model CRT monitor, and uses a Motorola 68010 central processing unit (CPU) with a MOS Technology 6502 subsystem to control the audio and coin operations.Marble Madness was Atari's first game to use an FM sound chip produced by Yamaha, which is similar to a Yamaha DX7 synthesizer and creates the music in real time so that it is in synchronization with the game's on-screen action. The game's music was composed by Brad Fuller and Hal Canon who spent a few months becoming familiar with the capabilities of the sound chip.

Cerny and Flanagan first collaborated on a video game based on Michael Jackson's Thriller. The project, however, was canceled and the two began work an idea of Cerny's that eventually became Marble Madness. Development lasted 10 months. Following the North American video game crash of 1983, video game development within Atari focused on providing a distinctive experience through the use of a unique control system and by emphasizing a simultaneous two-player mode. Cerny designed Marble Madness in accordance with these company goals. He was first inspired by miniature golf and captivated by the idea that a play field's contours influenced the ball's path. Cerny began testing various ideas using Atari's digital art system. After deciding to use an isometric grid, Cerny began developing the game's concept. His initial idea involved hitting a ball in a way similar to miniature golf, but Atari was unenthusiastic. Cerny next thought of racing games and planned for races on long tracks against an opponent. Technology limitations at the time were unable to handle the in-game physics necessary for the idea, and Cerny switched the game's objective to a race against time.

The Motorola CPU includes a compiler for the C programming language, which the two programmers were familiar with. After Atari had conducted performance evaluations, it approved usage of the language. Cerny and Flanagan's decision to program Marble Madness in the C language had positive and negative consequences. Atari games had previously been programmed in assembly language. The C language was easier to program, but was less efficient, so the game operates at the slower speed of 30 Hz instead of the normal 60 Hz frequency of arcade games at the time. Cerny decided to use a trackball system (marketed by Atari as Trak-Ball) to give the game a unique control system, and he chose a motorized trackball for faster spinning and braking when the in-game ball traveled downhill and uphill, respectively. As it was building the prototypes, Atari's design department informed Cerny that the motorized trackball's design had an inherent flaw—one of the four supports had poor contact with the ball—and the use of a regular trackball was more feasible. Additionally, Cerny had anticipated the use of powerful custom chips that would allow RAM-based sprites to be animated by the CPU, but the available hardware was a less-advanced system using ROM-based, static sprites.

These technical limitations forced Cerny to simplify the overall designs. Inspired by M. C. Escher, he designed abstract landscapes for the courses. In retrospect, Cerny partly attributed the designs to his limited artistic skills. He was a fan of the 3D graphics used in Battlezone and I, Robot, but felt that the visuals lacked definition and wanted to create a game with "solid and clean" 3D graphics. Unlike most other arcade games of the time, the course images were not drawn on the pixel level. Instead, Cerny defined the elevation of every point in the course, and stored this information in a heightmap array. The course graphics were then created by a ray tracing program that traced the path of light rays, using the heightmap to determine the appearance of the course on screen. This format also allowed Cerny to create shadows and use spatial anti-aliasing, a technique that provided the graphics with a smoother appearance. Cerny's course generator allowed him more time to experiment with the level designs. When deciding what elements to include in a course, practicality was a big factor; elements that would not work or would not appear as intended were omitted, such as an elastic barricade or a teeter-totter scale. Other ideas dropped from the designs were breakable glass supports, black hole traps, and bumps and obstacles built into the course that chased the marble.

Cerny's personal interests changed throughout the project, leading to the inclusion of new ideas absent from the original design documents. The game's enemy characters were designed by Cerny and Sam Comstock, who also animated them. Enemies had to be small in size due to technical limitations. Cerny and Comstock purposely omitted faces to give them unique designs and create a minimalistic appearance similar to the courses. Atari's management, however, suggested that the marble should have a smiley face to create an identified character, similar to Pac-Man. As a compromise, the cabinet's artwork depicts traces of a smiley face on the marbles. Flanagan programmed a three-dimensional physics model to dictate the marble's motions and an interpreted script for enemy behavior. As Marble Madness neared completion, the feedback from Atari's in-house focus testing was positive. In retrospect, Cerny wished he had included more courses to give the game greater longevity, but extra courses would have required more time and increased hardware costs. Atari was experiencing severe financial troubles at the time and could not extend the game's development period as it would have left their production factory idle.

Marble Madness was commercially successful following its December 1984 release and was positively received by critics. Around 4,000 cabinets were sold, and it soon became the highest-earning game in arcades. However, the game consistently fell from this ranking during its seventh week in arcades that Atari tracked the game's success. Cerny attributed the six week arcade life to Marble Madness's short gameplay length. He believed that players lost interest after mastering it and moved on to other games. The arcade cabinets have since become fairly rare.Stan Szczepanski holds the official world record of 187,880 points.

Many reviewers felt that the high level of skill required to play the game was part of its appeal. In 2008, Levi Buchanan of IGN listed Marble Madness as one of several titles in his "dream arcade", citing the game's difficulty and the fond memories he had playing it. Author John Sellers wrote that difficulty was a major reason that players were attracted. Other engaging factors included the graphics, visual design, and the soundtrack.Retro Gamer's Craig Grannell, in referring to the game as one of the most distinctive arcade games ever made, praised its visuals as "pure and timeless". In 2008, Guinness World Records listed it as the number seventy-nine arcade game in technical, creative, and cultural impact.Marble Madness was one of the first games to use true stereo sound and have a recognizable musical score. British composer Paul Weir commented that the music had character and helped give the game a unique identity. A common complaint about the arcade cabinet was that the track ball controls frequently broke from repeated use.

Unreleased sequel

An arcade sequel titled Marble Man: Marble Madness II was planned for release in 1991, though Cerny was uninvolved in the development. Development was led by Bob Flanagan who designed the game based on what he felt made Marble Madness a success in the home console market. Because the market's demographic was a younger audience, Flanagan wanted to make the sequel more accessible and introduced a superhero-type main character. Marble Man expanded on the gameplay of the original game by featuring new abilities for the marble such as invisibility and flight, included pinball minigames between sets of levels, and allowed up to three players to traverse isometric courses. Flanagan intended to address the short length of the first game and, with the help of Mike Hally, developed seventeen courses.

Atari created prototypes for location testing, but the game did not fare well against more popular titles at the time such as Street Fighter II. Atari assumed the track balls accounted for the poor reception and commissioned a second model with joystick controls. Because the new models were met with the same poor reception, production was halted and the focus shifted to Guardians of the 'Hood, a beat 'em up game. The prototypes that were produced have since become collector items.

Beginning in 1986, the game was ported to numerous platforms with different companies handling the conversions; several home versions were published by Electronic Arts,Tiger Electronics released handheld and tabletop LCD versions of the game, and it was ported to the Nintendo Entertainment System by Rare. Early versions featured simplified graphics, and the different ports were met with mixed reception. John Harris of Gamasutra thought the arcade's popularity fueled the sales of the home versions, while Thomas Hanley of ScrewAttack commented that most versions were not as enjoyable without a track ball. Grannell echoed similar statements about the controls and added that many had poor visuals and collision detection. He listed the Amiga, Game Boy, and Sega Mega Drive ports as the better conversions, and the Sinclair ZX Spectrum, PC, and Game Boy Advance versions among the worst.Dragon's three reviewers—Hartley, Patricia, and Kirk Lesser—praised the Apple IIGS port, calling it a "must have" title for arcade fans. In 2003, Marble Madness was included in the multi-platform title Midway Arcade Treasures, a compilation of classic games developed by Williams Electronics, Midway Games, and Atari Games. Electronic Arts released a mobile phone port in 2010 that includes additional levels with different themes and new items that augment the gameplay.

Marble Madness inspired other games that feature similar gameplay based on navigating a ball through progressively more difficult courses; such games are often described in terms that relate them to Marble Madness.Melbourne House's Gyroscope and Electric Dreams Software's Spindizzy were the first such games; both met with a good reception. In 1990, Rare released Snake Rattle 'n' Roll, which incorporated elements similar to Marble Madness. The Super Monkey Ball series uses similar gameplay based on rolling a ball, but adds other features such as minigames and monkey characters.

• Ballance, a marble game for Windows, released in 2004
• Marble Blast Gold, a marble game for Linux, Mac OS X and Windows, released in 2003
• Neverball, a freeware game similar to Super Monkey Ball, released in 2003
• Switchball, a marble game for Windows and consoles, released in 2007