It was founded in 1932 as the Connecticut Leather Company by a Russian immigrant Maurice Greenberg to sell leather supplies to shoemakers. This led to a business in leather craft kits in the 1950s which led to the sale of plastic wading pools in the 1960s. The leather part of the business was then sold off.
In the 1975, the company entered the video game console business with Telstar. Dozens of companies were introducing game systems that year to cash in on Atari's successful Pong console. Nearly all of these new games were based on General Instruments "Pong-on-a-chip". However GI had underestimated demand, and there were severe shortages. But Coleco had been one of the first to place their order, and as a result was one of the only companies to receive their full order. Though dedicated game consoles did not last long on the market, thanks to their early order Coleco was at least able to break even.
While the dedicated game console market was short lived, Coleco continued to do well in electronics. They transitioned next into handheld electronic games, a market popularized by Mattel. Coleco produced two very popular lines of games, the "head to head" series of two player sports games, and the mini-arcade series of licensed video arcade titles.
Coleco returned to the video game console market in 1982 with the launch of the ColecoVision. While the system was quite popular, Coleco hedged their bet on videogames by introducing a line of game cartridges for the Atari 2600 and Mattel Intellivision. As if that wasn't enough, they even went so far as to introduce the Coleco Gemini, a clone of the popular Atari 2600.
When the video game business began to implode in 1983, it seemed clear that video games were being replaced by home computers. So Coleco made the transition by introducing the Adam home computer. Unfortunately this turned out to be huge miscalculation. By the end of 1984 Coleco would completely withdraw from electronics as they teetered on the edge of bankruptcy.
Also in 1983, Coleco released the Cabbage Patch Kids series of dolls which were wildly successful. But the staggering success of the dolls wasn't enough to stem the tide of red ink that had begun with the launch of the Adam computer, and the company finally went broke. In 1989, the assets of Coleco were purchased by Hasbro.