Born and raised in Iowa City, Iowa, Foster graduated from the University of Iowa in 1972 with a BGS in Advertising/Marketing and Broadcast Journalism and lettered in track/cross country. He was the founder in 1974 and Managing Director of the Newton Nite Hawks minor league football team of the Northern States Football League. After winning the league championship in 1975 Foster organized and introduced the sport of American (pro level) football to Europe during a 5-game exhibition tour in June 1977 with the Nite Hawks and the Chicago Lions playing exhibition games in major European cities, including Paris, Frankfurt and Vienna. While Promotion Manager of NFL Properties, he invented the game of Arena football while watching the Major Indoor Soccer League All-Star game being played at Madison Square Garden on February 11, 1981. He drew out a diagram and rules on the back of a 9" x 12" manila envelope. Foster left the NFL in September 1982 to pursue a goal of managing a major professional football team with the Phoenix-based Arizona Wranglers during their inaugural 1983 season in the new USFL. After 1983 season ended, he accepted an offer to move back to the Midwest to serve as Executive Vice President for the restaging of the USFL Chicago Blitz under new ownership for the 1984 season. In the fall of 1985 after the USFL suspended operations to move from a spring season to a fall season on a head to head basis with the NFL, Foster soon after began working full-time on carefully testing and researching the mechanics and basic rules of the new game he had invented before actually launching the AFL, starting play in early June 1987. Foster served as founding President/Commissioner from 1985-1992, at which time he stepped down to begin the initial development of his own AFL team, the Iowa Barnstormers, which would bring professional football to his home state of Iowa for the first time, playing in the state's capitol and largest city, Des Moines. After staging a very successful and well received sold-out preseason, market test game on April 22, 1994, Foster then completed raising the required capital to fund and operate the team and launched operations in June to prepare for a 1995 inaugural season. He served as its Managing Owner through 2001, after which the team was then sold, with the AFL Barnstormers moving to Long Island in New York to become the New York Dragons.
In 1999 Foster co-founded and helped organize the AFL's developmental league, af2, in addition to founding and organizing the Quad City Steamwheelers af2 team in 1999 and serving as Managing 0wner until 2006. The Steamwheelers won back to back af2 titles in 2000 and 2001, going undefeated in their inaugural season at 19–0.
In 1990, thanks to a lengthy, successful effort by Chicago-based intellectual properties attorney, William Niro, Foster was granted a US patent on the game of arena football and the equipment unique to it, particularly the end zone Goalside Rebound Nets and padded Sideline Barriers, meaning that other indoor football leagues not affiliated with the AFL were legally required to play by at least somewhat different rules than the ones the AFL uses until the patent expired in September 2007. This primarily included no use of the Goalside/cross bar apparatus, as well as that no active usage of the Sideline Barriers could be incorporated into game playing rules. Additional patents were also secured for the arena football game system on an international basis, primarily in multiple European countries and also Mexico. (The league attempted to claim that numerous other properties of the game were covered under the patent, but a successful 1998 lawsuit from a competing upstart league narrowed the AFL's patent mainly to the Goalside/cross bar apparatus.)
Foster and his family moved from Chicago to Des Moines in August 1994 and lived there from 1994-2002 while he operated the Iowa Barnstormers in the AFL through the 2000 season and then as an af2 team for the 2001 season. He also served on the Iowa State Historical Society Foundation board 1998–2002 while living in Des Moines. They moved to Davenport, IA in the fall of 2002 to oversee operations of the Steamwheelers on a full-time basis.
Jim Foster was inducted into the American Football Association's Semi Pro Football Hall of Fame in 1982, The Arena Football League Hall of Fame Inaugural Class in 1998 and the af2, (arena football2 league) inaugural Hall of Fame class of 2009. Foster served is an Adjunct Professor in the Tippie College of Business, Pappajohn Entrepreneurial Center in Iowa City, teaching Pro Sports Management from 2011-2012, in addition to continuing his ongoing sports/events and marketing-related consulting projects work through Fostering Sports, Inc. in Davenport.