The company originally formed as Looking Glass Technology in 1992, when Blue Sky Productions and Lerner Research merged. Originally based in Lexington, Massachusetts, in 1994 the company moved to Cambridge. A significant number of Looking Glass personnel were MIT graduates. Looking Glass also had satellite offices in Redmond, Washington, Austin, TX and Huntington Beach, California. Looking Glass gained industry renown for their 3D engine used in Ultima Underworld: The Stygian Abyss and System Shock. In 1997, the company was renamed to Looking Glass Studios.
In 1997, the company merged with Intermetrics, Inc to become Intermetrics Entertainment Software, LLC. Intermetrics became AverStar after it acquired Pacer Infotech in February 1998. In March 1999, Intermetrics divested Looking Glass Studios Inc.
The company went out of business on May 24, 2000 during a financial crisis related to their publisher at the time, Eidos Interactive. Warren Spector managed to move many Looking Glass Studios employees over to Ion Storm Austin.
After the company folded, people from Looking Glass went on to work at Ion Storm, Irrational Games, Harmonix, Mad Doc Software, Arkane Studios, Westwood Studios, Valve, and to found Floodgate Entertainment and Digital Eel, amongst other later studios.
Ion Storm Austin developed Deus Ex and Deus Ex: Invisible War, the first two games in the Deus Ex series, and Thief: Deadly Shadows, the third game in the Thief series.