Despite its whimsical appearance, fairy painting is strongly rooted in the literary and theatrical influences of Romanticism, as well as in the cultural issues facing the Victorian era. Among the most significant of these influences were the fantasy themes of Shakespeare's A Midsummer Night's Dream and The Tempest. Other literary works, such as Edmund Spenser's The Faerie Queene and Alexander Pope's mock-heroic The Rape of the Lock have been cited as contributing influences as well. Innovations in stage production helped bring these works to the public eye, as the development of gaslight and improvements in wire-work led to increasingly elaborate special effects. Although once described by Douglas Jerrold as "a fairy creation that could only be acted by fairies", productions of A Midsummer Night's Dream became more common, eventually leading to an 1863 spectacle featuring Ellen Terry as Titania astride a mechanical mushroom.
Cultural changes were also an important factor during this period. Continuing industrialization was uprooting longstanding traditions, and rapid advances in science and technology, especially the invention of photography, left some people discomforted and confused. According to Jeremy Maas, the turn to mythological and fantasy elements, and in particular to the fairy's world, allowed an escape from these demands. "No other type of painting concentrates so many of the opposing elements of the Victorian psyche: the desire to escape the drear hardships of daily existence; the stirrings of new attitudes toward sex, stifled by religious dogma; a passion for the unseen; the birth of psychoanalysis; the latent revulsion against the exactitude of the new invention of photography." The significance of fairy paintings as a reaction to cultural change is not universally accepted, however. "Ultimately," Andrew Stuttaford wrote, "these paintings were just about fun."
The earliest artists considered to have contributed to the genre predate much of Romanticism and the Victorian era. Henry Fuseli and William Blake produced works that would be indicative of the later genre even before 1800. However, the artist most closely associated with fairy painting was outsider artist Richard Dadd, a suspected schizophrenic who produced most of his work while incarcerated in the Bethlem psychiatric hospital for the murder of his father. Despite his status and condition, his fantastic subjects and extraordinarily detailed style were generally well-received, with one period reviewer describing his work as "exquisitely ideal". He accompanied his masterpiece, The Fairy Feller's Master-Stroke, with an elaborate poem providing historical, literary, or mythological context to each of the characters depicted.
Fairy painting was not exclusively the domain of outside art, however. The work of John Anster Fitzgerald debuted at London's Royal Academy. His work, in the form a series of Christmas-themed fairy illustrations, received wider public visibility in the Illustrated London News. The Scottish artist Joseph Noel Paton exhibited two immensely detailed paintings based on the popular fairy scenes of A Midsummer Night's Dream. Even Edwin Landseer, sometimes named "Victoria's favourite artist", produced a painting of Titania and Bottom in the genre's style.
The genre also influenced the Pre-Raphaelite Brotherhood and the movement it began. Co-founder John Everett Millais produced a series of fairy paintings based on The Tempest, ending with his 1849 work Ferdinand Lured by Ariel. Dante Gabriel Rossetti, another of the Brotherhood's initial members, took a more sensual approach to the subject, in both painting and poetry. Others involved with the movement, such as Arthur Hughes and William Bell Scott, also contributed to the genre.
Although the Cottingley Fairies briefly revived interest in fae subjects, the waning of Romanticism and the advent of World War I reduced interest in the styles and topics popular during the Victorian era. The illustrated fairy-tale books of Arthur Rackham are considered its "final flowering".