In Raleigh, Psyonix consisted largely of Hagewood and interns hired from nearby universities. To stay afloat, the studio accepted contract work from Epic Games to help develop games in Unreal Engine, including Gears of War and Unreal Tournament III. Hagewood ultimately sought to move West and create original games with Psyonix. In 2006, the team devised Track Addict, a vehicle platform game with time trial stages, partially inspired by the Tony Hawk's and SSX series of extreme sports video games. The studio pitched the game to various publishers and agreed with Microsoft to release the game on the company's Xbox platform. During the game's development, one person put a soccer ball into a level, which the team enjoyed so much that they decided to design the game around that instead. Hagewood informed Microsoft about the change in direction, and the two companies parted ways. The game was ultimately released in 2008 for the PlayStation 3 as Supersonic Acrobatic Rocket-Powered Battle-Cars. The team chose an unusually long name hoping that it would attract attention. In the meantime, SouthPeak Games had contracted Psyonix to develop Monster Madness: Grave Danger, an updated port of Monster Madness: Battle for Suburbia, which was released for the PlayStation 3 in the same year.
On May 1, 2019, Epic Games announced its acquisition of Psyonix to undisclosed terms. At the time, the studio had 132 employees and planned to continue supporting Rocket League. From his proceeds of the sale, Hagewood bought the Benetti Galaxy, a 56-metre (184 ft) superyacht, and intended to invest in space tourism. Epic Games published Rocket League Sideswipe for Android and iOS in November 2021 and Psyonix's Rocket Racing game mode for Fortnite in December 2023.
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