The New Element was researched and theorized by Howard Stark, and later synthesized by Tony Stark. It was theorized as a replacement for the palladium core in Tony's Arc Reactor, which had been poisoning him.
Following his recovery of the Tesseract from the bottom of the ocean, Howard Stark began closely researching the object as he believed it to be the key to limitless, renewable, clean energy. During the course of his study of the object, Howard theorized a new element structure that could partially replicate the energy of the Tesseract.
However, limited by the technology of his time, Howard was unable to create the element for himself and instead left the blueprints for the element hidden in a model of the Stark Expo fairgrounds for his son Tony to discover later. Evidence of Howard's research with the Tesseract was later indicated through several drawings of a hypercube, a theoretical representation of the Tesseract, spread throughout many of his research notes.
In the months following Tony Stark's continued activities as the armored hero Iron Man, he became afflicted with palladium blood poisoning from the degrading palladium cores from the Arc Reactor embedded in his chest, accelerated by the continued use of his Armored Suit. Tony sought to find a replacement material for the reactor's core, but no known element was compatible with the Arc Reactor.
S.H.I.E.L.D. became aware of his problem and Nick Fury gave him a package that once belonged to his father. In the box was a film reel where Howard strongly suggested that there was something hidden in a model of the Stark Expo. Tony discovered that the buildings in the model formed the atomic structure of a new element. He recreated the element by using a Particle Accelerator in his basement and created a brand new Arc Reactor to utilize the new core and a new suit that could better utilize the higher energy output, as well as cure him of the palladium poisoning in his blood. He later tried to get it patented as "badassium" but ran into many legal issues.
- In the Iron Man 2 novelization, the element created by Tony Stark to replace palladium in the Arc Reactor is called vibranium. The subsequent release of Captain America: The First Avenger retcons that information.
- On initial installation of the newly created Arc Reactor, Tony remarks that it "tastes like coconut.. and metal."