Sega released the Nomad in October 1995 for US$180. Marketed as a portable Genesis, the Nomad was primarily an evolution of the Japanese market Mega Jet. Whereas the Mega Jet was screenless and required an AC adapter, the Nomad featured a 3.25 inch color LCD screen and room for six AA batteries, making it completely portable as opposed to simply being a small (travel-size) Genesis system. In addition to its other improvements over the Mega Jet, an A/V Out plug was added at the top of the unit, letting owners play games on a television screen with a separate A/V cable. One particularly interesting feature of the Nomad was its ability to allow one player to play using a connected TV, while another watched on the Nomad. The directional pad on the unit controlled all one-player games, and a port on the bottom allowed a second controller pad to be plugged in for two-player games. This meant that the Nomad could be a fully functional home system as well as a completely portable hand-held solution with a pre-existing library of games available for it.

While the Nomad won praise for its screen resolution and features, there were compatibility problems with the sister system's add-ons: the Sega 32X, the Sega-CD, and the Power Base Converter. While they did work technologically, forcing compatibility involved modifying the add-on units' shapes or using 3rd party expanders. The Nomad had impressive technical specifications for the time including a full colour backlit display, and supported an estimated 600 titles already on the shelves in addition to being a functional home system.

However, the Nomad was bulky and offered limited battery life in comparison to contemporary handhelds - specifically, the Nintendo Game Boy. The Nomad was not power efficient and a rechargeable battery pack was offered separately for $79. Rechargeable AA batteries were not recommended due to voltage problems (Ni-Cd provides 1.2V instead of the 1.5V that alkalines output, and also requires full discharging before recharging; Ni-MH AA batteries were not available at the time.

Like the Game Gear the unit was too bulky to be easily portable, it consumed batteries at a rapid rate and was designed for playing what were in effect home videogames (the Game Gear having been in effect a handheld Master System in the same way the Nomad was a handheld Megadrive/Genesis).

Despite a $100 price drop, the handheld did not garner enough support to continue. By the time it was released, the Genesis was almost at the end of its lifespan — already being replaced by the Sega Saturn, Sony PlayStation and Nintendo 64, and general indifference towards 16-bit era titles hastened its demise.