V2.0 also brought particle effects, fog and HD video output. IClone v2.0 was released in March 2007 with an emphasis on new G2 character styles and the introduction of Clone Cloth, for creating custom clothing for actors through editing materials and applying them to pre-designed 3D avatar models it became one of the first ways iClone users could create and sell their own content for iClone. Reallusion's Vice President John C Martin II presented the Machinima Festival attendees with a demo of iClone and news that Reallusion would provide a full commercial license for all movies produced with v1.0 and beyond as a counter-strike to game development companies’ policy.

iClone v1.0 was adopted by many Machinima filmmakers and was showcased at the 2005 Machinima Film Festival held at the Museum of the Moving Image in Queens, New York. The ability of gamers to sell or broadcast their films was challenged by game makers. The face mapping tools and real-time 3D animation environment made iClone popular with the community of Machinima, which is a video game based filmmaking technique that transformed gamers into filmmakers by capturing live video action from within video games and virtual worlds, like Quake and Second Life. Reallusion’s facial mapping and lip-synch animation technology derived from the 2001 release of CrazyTalk 2D animation software. It supported real-time 3D animation and creation of avatars from photographs. Reallusion launched iClone v1.0 in December, 2005 as a tool to create 3D animation and render animated videos. IClone is developed and marketed by Reallusion.

iClone is also notable for offering users royalty-free usage of all content that they create with the software, even when using Reallusion's own assets library.

Other functionality includes: full facial and skeletal animation of human and animal figures lip-syncing import of standard 3D file types including FBX a timeline for editing and merging motions a Python API and a scripting language ( Lua) for character interaction application of standard motion-capture files the ability to control an animated scene in the same manner as playing a videogame and the import of models from Google 3D Warehouse, among many other features. Real-time playback is enabled by using a 3D videogame engine for instant on-screen rendering.

IClone is a real-time 3D animation and rendering software program.

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