The creater of the halflings is unknown, though some believe it to be the Lost God Ethyrion. Certainly their nature tends towards the mischievous and irreverent - traits often associated with Ethyrion.

The halflings were originally inhabitants of Ambledale, to the east of the Wyrmsdown. They were driven out of their ancestral home by the Goblins in the First Age. For many generations the fought alongside the Horse Lords, trying to regain their lands but were unable to do so. The surviving halflings abandoned Ambledale and began the life of nomads, travelling the world. They can be found throughout the northern continent.

There are two distinct types of halfling. The Lutari are those who still follow the philosophy of 'The Long Road' and are also called gypsies or tinkers. They are nomadic, never staying in one place for too long. The Lutari travel in groups of one to ten families, between five and fifty people. Groups of more than fifty are rare, though they sometimes do occur for protection in dangerous areas. Treatment of the gypsies varies from place to place. In Pendaran they are reviled and banned from most cities. In Tarnberyth they are tolerated, but most cities will be wary of large numbers. They are really only made welcome in Midwinter, the Vale of Erryn, the Highlands and the Stonelands.

The Lutari have particularly close links with Midwinter. Menag Bargon, the founder of the current city, used the Lutari during his wars against the Horde. Their knowledge of the Southern Wildlands was essential to the hit-and-run tactics Bargon used to defeat of the Horde, despite his fewer troops. In return for their help, Bargon gave the Lutari one of the islands in Midwinter Bay. Since that day, the Lutari have held a semi-permanent fair on the island - known as Tinker's Island.

The second group are known as the Shenari - the Settlers. These are halflings who have abandoned their travelling ways and settled down. There are many communities throughout Tarnberyth and Kaylonna.

Halfling are matriarchal, the eldest living woman runs each family. When families gather together, the elders jointly rule the group.