On September 29 2005, Namco officially merged with Japanese toymaker Bandai to form Namco Bandai Holdings Inc (NBHD), one of the largest entertainment companies in Japan.Namco became a wholly owned subsidiary of the holding company. Although officially the merger was absorption, "Under the holding company, Namco, Bandai and other affiliated companies will mutually cooperate and contribute to the growth of the whole group based on their respective business strategies."

Under the holding company, on March 31 2006, Namco merged with Bandai's video game operations and was renamed Namco Bandai Games Inc. (NBGI), which is also the head of NBHD's Game Contents Strategic Business Unit (SBU).

Namco Ltd.'s arcade venue, theme park and exploratory businesses as well as the Namco Ltd. corporate name and logo were spun off to create a new sister company. (Namco 2: see below). It is the head of NBHD's Amusement SBU.

Some of the company's most famous games include Pac-Man, Galaxian, Klonoa, Rally-X, Galaga, Bosconian, Dig Dug, Pole Position, Xevious, Mappy, Soul series, Time Crisis, Tekken, Taiko no Tatsujin, the Tales of series, Xenosaga, Ace Combat, Katamari Damacy and Ridge Racer.

Namco 1: now Namco Bandai Games

This section mainly describes the history of the original Namco Ltd. which was renamed Namco Bandai Games Inc. on March 31, 2006. See Namco Bandai Games for the history after the renaming.

Namco was founded in Tokyo in 1955, by Masaya Nakamura under the name Nakamura Manufacturing Ltd. It began by producing mechanical rocking-horses and similar children's rides, which were installed in a number of department stores in Yokohama and Nihonbashi. It continued this line of production through the 1960s, and expanded with the addition of rides modeled after Walt Disney characters in 1966.

After the company's brand name was changed to Namco in 1971, it acquired the Japanese division of Atari in 1974, thus bringing Namco into the coin-operated video game market. Namco Enterprises Asia Ltd. was established in Hong Kong and was soon followed by Namco America, Inc., based in California. In 1978, Namco released its first arcade video game Gee Bee which was designed by Toru Iwatani. He also designed two sequels, Bomb Bee and Cutie Q, which were released in 1979. The year 1980, saw the introduction of the company's most famous coin-operated arcade game, Pac-Man, which was also developed by Iwatani. The main character, Pac-Man, has now been made the company's official mascot. When Nintendo began producing its Famicom home console unit, Namco started the development of game titles for it, beginning with Galaxian, which had first been introduced to arcades in 1979. Video games for this console were released in Japan under the moniker Namcot (with the letter t at the end).