The Slinky was invented and developed by naval engineer Richard T. James in 1943 and successfully demonstrated at Gimbels department store in Philadelphia on November 27, 1945.

The Slinky was originally priced at $5, but many paid much more due to price increases of spring steel in Pennsylvania. It has, however, remained modestly priced throughout its history as a result of Betty James' concern about the toy's affordability for less affluent customers. In addition to its use as a toy, it has been used as a classroom teaching tool; as a portable and extendable radio antenna in wartime (particularly the Vietnam War). It was inducted into the National Toy Hall of Fame at The Strong in Rochester, New York in 2000. In 2003, it was named to the Toy Industry Association's Century of Toys List. In its first 60 years, about 300 million Slinkys were sold.

In 1943, Richard T. James, a naval mechanical engineer, observed a spring "stepping" downward after being knocked off a shelf, then coming to rest in a vertical position. James's wife Betty later recalled, "He came home and said, 'I think if I got the right property of steel and the right tension, I could make it walk.'" James experimented with different types of steel wire over the next year, and finally found a spring that would "walk". Betty was skeptical, but changed her mind when the toy was fine-tuned and neighborhood children expressed an excited interest in it.

Richard and Betty formed James Industries and began manufacturing slinkys in Clifton Heights, Pennsylvania, selling them for $1 each. They were 2+1⁄2 inches (64 mm) tall, and included 98 coils of high-grade blue-black Swedish steel. They initially had difficulty selling Slinky to toy stores, but in 1945, they were granted permission to set up an inclined plane in the toy section of Gimbels Department Store in Philadelphia to demonstrate it on the Tuesday after Thanksgiving. It was an instant hit; the first 400 units were sold in 90 minutes. In 1946, Slinky was introduced at the American Toy Fair.

In 1960, after his wife filed for divorce, Richard James left the company and he became an evangelical missionary in Bolivia with Wycliffe Bible Translators. Betty James moved the company to Hollidaysburg, Pennsylvania in 1964 and the company grew under her direction. She attributed the toy's success to its "simplicity". The company was sold to Poof Products, Inc. in 1998. Slinky continued production in Hollidaysburg.

Betty James died of congestive heart failure in November 2008, at age 90, after serving as James Industries' president from 1960 to 1998.

In July 2012, Poof-Slinky, Inc. was acquired by the private equity firm Propel Equity Partners. In 2014, Propel Equity Partners consolidated Poof-Slinky® and several other toy brands into Alex Brands™.

In July 2020, the Slinky brand was sold to Just Play.