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The arcade title Gran Trak 10, released by Atari in 1974 is generally considered as the progenitor of the genre. In Gran Track 10, the player races against the clock to accumulate points. While challenging, it is not competition racing. True "racing" as we know it was started by the Namco game Pole Position in 1982. This time the player has AI cars to race against, and time limit to keep pushing the players to go faster. Pole Position is also the first game to be based on a real racing circuit.

Racing games in general tend to drift toward the arcade side of reality, mainly due to hardware limitations, especially in the 1980s and 1990s. It is however untrue to say that there were no games considered simulations in their time.

In 1984 Geoff Crammond, later to develop the Grandprix series (Known collectively as GPX to its fanbase) produced what is considered the first attempt at a racing simulator, REVS, for the BBC Microcomputer. The game offered an unofficial, (and hence with no official team or driver names associated with the series} recreation of British Formula 3. The hardware capabilities limited the depth of the simulation and restricted it (Initially) to one track but it was far above any other games at the time in terms of detail.