Doug Engelbart, who has died aged 88, will be remembered as the man who in 1963 invented the computer mouse, but that was incidental to his vision of computers augmenting the human intellect and increasing our "collective IQ". While he became a much-loved and oft-lauded Silicon Valley celebrity, his most visionary ideas were neglected and went unfunded.

Nonetheless, Engelbart had a massive impact on the world of computing via what became known as "the mother of all demos", which he gave at a computer conference in San Francisco in 1968. The computer scientist Alan Kay, a co-founder of Xerox PARC, said later: "The demo was one of the greatest experiences of my life. To me, it was Moses opening the Red Sea … It reset the whole conception of what was reasonable to think about in personal computing." It was a huge leap forward compared with operating computers using punch cards and it inspired a generation. Engelbart's ideas were at the root of what we do online today.

The demo involved Engelbart sitting at a computer keyboard operating a mouse, with the interactive action projected on a big screen. It demonstrated a stream of original ideas, including the mouse, multiple windows, hypertext, outline processing and shared-screen teleconferencing. All of these arrived on affordable personal computers roughly two decades later, following the invention of the microprocessor.

They were only possible in 1968 because of a massive effort by the 12-strong team from Engelbart's Augmentation Research Centre, backed by research funds from the Defense Advanced Research Projects Agency (Darpa, part of the US defence department) and the resources of the Stanford Research Institute (SRI). Who but Engelbart would have been crazy enough to devote all this remote and extremely expensive computer power to – as his demo showed – a single user manipulating his shopping list?

Engelbart was the middle of three children of Carl and Gladys Engelbart. He was born in Portland, Oregon, grew up during the Great Depression on a small farmstead nearby, and went to Oregon State University to study electrical engineering. The second world war interrupted his studies, and he spent two years in the navy, including a year as a radar technician in the Philippines. After completing his degree in 1948, he moved to San Francisco to work at the NACA Ames laboratory, the forerunner of Nasa.

As an electrical engineer with a good job and (in 1951) a fiancee, he could have settled down for life, but he wanted to do something that would make a difference: to improve the world. In part, he was inspired by a famous 1945 article by Vannevar Bush in the Atlantic magazine, As We May Think. This described an imaginary information desk called the Memex, which was based mainly on microfilmed documents. Engelbart had a vision of radar-type screens being used to organise and share information, so he went to the University of California at Berkeley to do a PhD.

In 1957, he got lucky in getting a research position at SRI, and in 1962 published his seminal work, Augmenting Human Intellect: A Conceptual Framework, produced for the US Air Force. This led to the setting up of his Augmentation Research Centre (ARC) research lab, which developed the NLS (oN-Line System) used in the 1968 demo. The ARPAnet was developed partly to support NLS, and ARC was the second node on what became the internet.

The rapid increases in computer power and communication networks in the 1970s, and the arrival of personal computers, might have sealed the victory of Engelbart's crazy ideas for augmenting the human intellect, but it had the opposite effect. His collaborative ideas were based on centralised computing and time-sharing, but these were the enemies of the countercultural revolution in personal computing. Engelbart's vision effectively came to a premature end.

In 1977, SRI sold NLS – and moved Engelbart and his ARC – to Tymshare Inc, which sold it as an office automation product called Augment. Some researchers moved to Xerox PARC, where the modern mouse-and-windows-based personal computer was developed, and some remained at SRI. The research team had been broken up and the new target was commercialisation. Engelbart stayed on after Tymshare was taken over by the aircraft manufacturer McDonnell Douglas in 1984, before finally leaving in 1989.

After that, Engelbart set up the tiny Bootstrap Institute with his daughter Christina, which survives as the Doug Engelbart Institute, providing a useful history of his life and times. From 1992 to 2007, Engelbart was given an office at Logitech's headquarters, before finally returning to SRI some 30 years after he had left it.

Engelbart was given the Turing award by the Association of Computing Machinery and the $500,000 MIT-Lemelson prize in 1997; and the von Neumann award from the Institute of Electrical and Electronics Engineers in 1998, among other honours. He was awarded the US national medal of technology and inducted into the National Inventors Hall of Fame in 2000.

Engelbart's first wife, Ballard, died in 1997. He is survived by his second wife, Karen; four children, Gerda, Christina, Diana and Norman; and nine grandchildren.

• Douglas Carl Engelbart, computer scientist, born 30 January 1925; died 2 July 2013