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The original inflatable structure was designed in 1959 by John Scurlock. He was experimenting with inflatable covers for tennis courts when he noticed his employees enjoyed jumping on the covers. He started the Space Walk company to market them for children and called them Space Walks. He started out with a large air mattress. In 1967-1968, he decided to add walls. The windows were made of solid clear plastic and were enclosed like a bubble- one fan inflated the base while another inflated the bubble and circulated air for the riders.

Inflatable structures were also designed by university students in England around 1961 for a fundraising event.

The surfaces are typically composed of thick, strong PVC or vinyl and nylon, and the castle is inflated using an electric or petrol-powered blower. The principle is one of constant leakage, meaning small punctures are not a problem, although this means the fans need to be quite powerful; a medium-size "bouncy castle" requires a fan with a mechanical output of about two horsepower (consuming around 2 kW electrical power, allowing for the efficiency of the motor).

The term "moonwalk" has evolved as the generic term for enclosed inflatable trampolines in the US. Modern moonwalks in the US are typically supported by inflatable columns and enclosed with netting to allow air to pass through.The netting also allows for proper supervision as adults can see in from all sides.

UK and Australian bouncy castles have different specifications calling for fully inflated walls on 3 sides with an open front and foam "crash mats" to catch children who may jump or fall out of the structure.

Inflatables are most commonly rented for private functions, school and church festivals and village fetes. Although they are aimed at children, adult castles can be hired in the UK. Because of liability concerns moonwalks are rarely rented to adults in the US. They are often used to wrestle, bounce or rumble. Recently, a theatrical group has started performing Shakespearian tragedies on bouncy castles at the Edinburgh Fringe Festival (Hamlet in 2006, Macbeth in 2007).

The growth in popularity of standard moonwalks has led to an entire inflatable amusement industry which includes inflatable slides, obstacle courses, games, and more. Inflatables are ideal for portable amusements because they are relatively easy to transport and store but make a big impact when fully inflated.