1960s-1970s

The term "action figure" was first used by Hasbro in 1964, to market their G.I. Joe figure to boys who wouldn't play with dolls. G.I. Joe was initially a military-themed 11.5-inch figure proposed by marketing and toy idea-man Stan Weston. It featured changeable clothes with various uniforms to suit different purposes. In a move that would create global popularity for this type of toy, Hasbro also licensed the product to companies in other markets.

These different licensees had a combination of uniforms and accessories that were usually identical to the ones manufactured for the US market by Hasbro, along with some sets that were unique to the local market.

The Japanese had at least two examples where a Hasbro licensee also issued sublicenses for related products. For example, Palitoy issued a sublicense to Tsukuda, a company in Japan, to manufacture and sell Action Man accessories in the Japanese market. Takara also issued a sublicense to Medicom for the manufacture of action figures.

Takara, still under license by Hasbro to make and sell G.I. Joe toys in Japan, also manufactured an action figure incorporating the licensed GI Joe torso for Henshin Cyborg-1, using transparent plastic revealing cyborg innards, and a chrome head and cyborg feet. During the oil supply crisis of the 1970s, like many other manufacturers of action figures, Takara was struggling with the costs associated with making the large 11 ½ inch figures, So, a smaller version of the cyborg toy was developed, standing at 3-3/4 inches high, and was first sold in 1974 as Microman. The Microman line was also novel in its use of interchangeable parts. This laid the foundation for both the smaller action figure size and the transforming robot toy. Takara began producing characters in the Microman line with increasingly robotic features, including Robotman, a 12" robot with room for a Microman pilot, and Mini-Robotman, a 3-3/4" version of Robotman. These toys also featured interchangeable parts, with emphasis placed on the transformation and combination of the characters.

In 1971, Mego began licensing and making American Marvel and DC comic book superhero figures which had highly successful sales and are considered highly collectible by many adults today. They eventually brought the Microman toy line to the United States as the Micronauts, but Mego eventually lost control of the market after rejecting the license to produce Star Wars toys in 1976. The widespread success of Kenner's Star Wars 3-3/4" toy line made the newer, smaller size the industry standard. Instead of a single character with outfits that changed for different applications, toy lines included teams of characters with special functions. Led by Star Wars-themed sales, collectible action figures quickly became a multi-million dollar secondary business for movie studios.