The Falcon was released in late 1992 and subsequently cancelled in late 1993 as Atari Corp restructured itself to focus completely on the release and support of its newest product, the Atari Jaguar video game console.

The Falcon's performance was not as great as it could have been, mostly due to Atari Corp.'s decision to put the 32-bit 68030 microprocessor on a 16-bit data bus. This was in order to maintain close compatibility with the Atari STE. Apple Computer was widely criticised for making the same kind of decision with their Macintosh LC computer, although this was done to prevent sales of this low-end computer from cutting into the sales of the more expensive Macs.[citation needed]

Atari Corp. created a number of prototypes of the Falcon040 (based on the more capable fully-pipelined, integrated-FPU, Motorola 68040, and using a "microbox" case), but canceled it in order to focus developers on the Atari Jaguar.

The microbox case designed by Atari Corp. looks a lot like the Sony PlayStation 2, right down to the ability to run it vertically or horizontally. It is even referenced in the PS2 patent applications.

Shortly after release Atari Corp. bundled the MultiTOS Operating system in addition to TOS. TOS remained in ROM, and MultiTOS was supplied on floppy disk and could be installed to boot from hard disk.

In 1995, the music company C-Lab bought the rights to the Falcon hardware design and began producing their own versions. The Falcon Mk I was a direct continuation of Atari Corp.'s Falcon030 with TOS 4.04. The Falcon Mk II addressed a number of shortcomings in the original design, making it more suitable to use in a recording studio (these were unofficially termed 'Cubase modifications') such as accepting Line-level audio in without the need for a pre-amp or mixer. The Falcon Mk X was mounted in a 19" 1U rack case, with external keyboard and space for internal SCSI hard discs.

Today, the Falcon is one of Atari Corp.'s most popular machines for hardware modding. Due to its expansion capabilities, several accelerators have been produced. Some of them overclock the CPU and/or the bus, while others upgrade the CPU to a Motorola 68060.