The Mega CD was a follow on from the huge success of the Sega Mega Drive/Sega Genesis and was released in November 1992 in America. Although it was not the first CD-based video game system NEC had already released their PC Engine CD), it was the superior model at this stage.

Originally, the Mega CD was a CD tray unit that sat under the console until it was redesigned in 1993 as a top-loading unit that was smaller, cheaper (US$230), more reliable and would fit next to the Mega Drive II/Genesis II.

With the massive amount of storage space on CDs, game producers saw the capability of using Full Motion Video (FMV) in their games. Unfortunately, when shown on a 16-bit console, the graphics turned out very pixellated and grainy, but that didn't stop them continuing to make such games. Other games were re-releases of Mega Drive titles but with more levels or added FMV sequences/music. The Mega CD/Sega CD was selling fairly well, but not as well as it could. This was because of the games. At Summer CES in 1992, Sega announced that Sonic CD was coming to the system, and when it did, sales soared, just like what had happened with the Mega Drive/Genesis when the same character made his debut.

Ultimately, however, the number of FMV games for the Mega CD didn't help. Although the games looked amazing at the time because of the real video, there was not much player involvement and so people got bored of them. The Mega CD slowly went downhill from 1993 until it died in 1996.

Specifications:
- Processor: Motorola 68000 running at 12.5 MHz
- CPU: 16-bit CPU (syncs with Genesis 68000 CPU)
- Audio: Stock Genesis audio (16-bit, 8-channel PCM with 8x over-sampling at 32 KHz)
- Enhanced PCM and DAC capabilities
- Graphics: Sega custom ASIC graphics processor (scaling, rotation, zoom, etc.)
- Colour Palettes: 128 colour palette using HAM (Hold And Modify) techniques and 256 colour palette for FMV sequences (CinePak and TruVideo)
- RAM: 768K RAM on-board (added to stock Genesis memory, doubles system memory) and -128K RAM dedicated to CD-ROM, 64K backup RAM
- ROM: 128K
- Connection: Custom sidecar connector (plugs into side of Genesis console)
- CD-ROM drive: ISO-9660 Mode 1 compliant 1X CD-ROM drive (150 Kbytes/sec data transfer rate)
- Media: 500 MB max capacity utilizing standard CD-ROM discs
- CD-ROM compatible with High Sierra, Red Book (CDDA), and CD+G formats