They reached the height of their popularity in the 1980s. Most sets are pre-printed with outline images of popular children's characters or other subjects, which are then coloured in before baking.

Shrinky dinks were invented in 1973 by Betty Morris of Brookfield, Wisconsin. The first kits were manufactured by the major toy companies of the time such as Milton Bradley, Colorforms, Western Publishing and Skyline Toys. The shrink plastic is still available from many retailers and can be used for anything from charms to pins.

Prior to heating, the thin, flexible polystyrene plastic sheets can be coloured with felt-tip pens, acrylic paint, colored pencils, etc. and cut into shapes. However, oily or waxy substances (such as cheap colored pencils, crayons, or oil paint) are not suitable because they melt or burn in high heat.

When heated in the oven or with a heat gun, the plastic shrinks by about 5/8ths and becomes thicker and more rigid, while retaining the colored design.

Although Shrinky Dinks is considered to be an arts and crafts product for children, many adult crafters find the product to be suitable for jewelry making and other projects. For this purpose, blank sheets are available sometimes known as Shrink Plastic.

Recently, University of California, Merced Professor Michelle Khine has applied Shrinky Dinks to create tiny structures for the application of Microfluidics to topics such as stem cell research.