In 1955 the computer scientist John McCarthy, who has died aged 84, coined the term artificial intelligence, or AI. His pioneering work in AI – which he defined as "the science and engineering of making intelligent machines" – included organising the first Dartmouth conference on artificial intelligence, and developing the programming language Lisp in 1958. This was the second high-level language, after Fortran, and was based on the radical idea of computing using symbolic expressions rather than numbers. It helped spawn a whole AI industry.

McCarthy was also the first to propose a time-sharing model of computing. In 1961 he suggested that if his approach were adopted, "computing may some day be organised as a public utility, just as the telephone system is a public utility", and that this could become the basis of a significant new industry. This is the way that cloud computing is sold today.

However, when obliged to choose between the time-sharing work at the Massachusetts Institute of Technology (MIT) and AI, he chose AI. He said: "The ultimate effort is to make computer programs that can solve problems and achieve goals as well as humans. However, many people involved in particular research areas are much less ambitious."

In AI, McCarthy tackled such problems as whether it was "legitimate to ascribe certain beliefs, knowledge, free will, intentions, consciousness, abilities or wants to a machine or computer program". This led to a heated argument about whether thermostats could be said to have beliefs. This is not an idle debate. In the US, Nest has just announced a self-learning thermostat.

In other papers such as Free Will – Even for Robots, and Deterministic Free Will, McCarthy explored ideas of robot decision-making. He wrote a science fiction story, The Robot and the Baby, to "partly illustrate my opinions about what household robots should be like". His robot's reasoning is displayed in a Lisp-like manner as R781 decides to simulate love for Travis, the human baby. The story includes lines such as "(Required (Not (Cause Robot781) (Believes Travis (Person Robot781))))". The computer industry joke is that Lisp actually stands for Lots of Irritating Single Parentheses.

McCarthy was also involved with computer chess, as one of the ways of exploring computer decision-making, though he quickly became disillusioned. "Unfortunately, the competitive and commercial aspects of making computers play chess have taken precedence over using chess as a scientific domain," he said. "It is as if the geneticists after 1910 had organised fruit fly races and concentrated their efforts on breeding fruit flies that could win these races."

He was born in Boston to an immigrant Irish father, Jack McCarthy, and a Lithuanian Jewish mother, Ida (nee Glatt). They lost their house in the depression, and the family moved via New York and Cleveland to Los Angeles, hoping the climate would help improve Jack's health. Jack and Ida were labour union organisers and, for many years, communists, leaving the party due to disillusionment over events in the Soviet Union. Ida also worked as a journalist for the Federated Press.

In his teens, McCarthy taught himself calculus from textbooks used at the nearby California Institute of Technology. At the age of 17, as a Caltech student, he was assigned to a graduate class.

In September 1948 McCarthy found his life's work. He attended the Hixon Symposium on Cerebral Mechanisms in Behaviour, a Caltech conference that included papers on automata, the brain and intelligence, and Why the Mind Is in the Head. According to a celebration of his work published in AI Magazine, "from that time on, his chief interests related to the development of machines that could think like people".

McCarthy graduated from Caltech in 1948, then gained his PhD in mathematics at Princeton in 1951. At Princeton he became friends with another student, Marvin Minsky, who shared his passion for AI. They collaborated on numerous projects over the next decade, which included co-founding the AI lab at MIT. The initial request was for a room, a keypunch and two programmers, which came along with six graduate students. The lab was a huge success, though the interests of the founders diverged. As AI Magazine noted: "McCarthy became increasingly committed to the logicist approach to AI. Minsky came to believe that it was wrong-headed and infeasible."

In 1962 McCarthy switched coasts, moving back to California and founding SAIL, the Stanford AI laboratory, at Stanford University. He continued his work there as an emeritus professor after his official retirement in 2000. He was developing another computer language called Elephant, based, he said, "on two slogans. One is that an elephant never forgets, and the other is 'I meant what I said and I said what I meant. An elephant's faithful 100%.'" His numerous honours included a Turing award (1971), Japan's Kyoto prize (1988) and America's National Medal of Science (1990).

McCarthy married three times. His second wife, Vera Watson, an IBM computer programmer and researcher, was killed in a climbing accident in 1978 in the Himalayas. He is survived by his third wife, Carolyn Talcott, and their son Timothy; by his daughters, Susan and Sarah, from his first marriage, to Martha Coyote, which ended in divorce; by two grandchildren; and by his brother, Patrick.

Wendy M Grossman writes: John McCarthy liked arguing with smart people, shunned fools and small talk, and from his beginnings as a communist, gradually shifted rightwards to conservative republicanism. His curiosity was wide-ranging, as was his taste in reading. He particularly liked the novels of Georgette Heyer, and you would be as likely to find those alongside his Kindle as you would spare copies of Logicomix, the graphic novel tracing the quest for the foundations of mathematics. Earlier this year, he emailed me to look for help in understanding a reference to cheap tin trays in a John Masefield poem.

He could be oblivious to danger. In early 2006, en route to meet his daughter and son-in-law for dinner, the distractions of conversation made his driving terrifyingly erratic. I suggested we swap. To my horror, he immediately pulled over at the side of a crowded highway, crammed with high-speed rush-hour traffic, and immediately got out of the car. With trucks whooshing past with inches to spare, he began shuffling sideways around the car leaving the door wide open.

Fortunately, nothing hit him (or the car), and the grandfather of AI lived to make more conference appearances, collaborate on some additional papers, and convene the 50th anniversary of the 1956 Dartmouth conference.

• John McCarthy, computer scientist, born 4 September 1927; died 24 October 2011

• John McCarthy's homepage

• John McCarthy interview