A Beanie Baby is a stuffed animal filled with plastic pellets, or "beans," rather than stuffing (see PVC). A Beanie Baby is thus a form of bean bag.

The original Beanie Babies were created by Ty Warner through his company Ty Inc. Ty claimed rightful ownership of the name and of all of the designs of their various "beanies." There have been imitations by other companies that jumped onto the idea of creating beanbag-like stuffed animals, however, including one imitator who even produced a tie-dyed bear (reminiscent of Ty's "Garcia"), as well as parodies such as the "Meanie Babies".

The official Beanie Babies were mostly in the shape of animals, such as dogs, cats, pigs, hippos, and others and were all brightly colored and stylized. Each Baby came with his or her own name, a birthday date, and a simple poem describing their personality. For example, the poem of Bongo the monkey went:

Bongo the monkey lives in a tree
He's the happiest monkey you'll ever see
In his spare time he plays the guitar
One of these days he will be a big star!
This information was all contained on a red, heart-shaped "book" tag usually affixed to the animal's ear.

As the years went on hundreds of different Beanie Babies were created, often resorting to more obscure animals such as aardvarks or chameleons in the process. One popular "series" within the Beanie Baby menagerie was the use of teddy bear-shaped Beanies, the basic pattern of which was repeatedly re-used, but with different colors and names. The bear model was frequently used for commemorative purposes, and special bears such as a Fourth of July model and even a Diana, Princess of Wales commemorative were created. HI0 Starting in late 1996, a faddish craze of collecting Beanie Babies began. In a buying frenzy reminiscent of the Cabbage Patch Kid mania of the early 1980s, several speculators purchased these collectibles en masse in hopes of making a fortune years later from being able to sell rare specimens.

Ty fed the frenzy by systematically "retiring" various designs of Beanie Babies and ceasing their production. Estimates of the number of each Beanie Baby that would survive years into the future were much lower than the reality, however, and much like the Cabbage Patch Kid phenomenon, so many people had similar plans that very few people profited from the craze.

Like the Internet stocks of the period, this was a recent example of an economic bubble.