Schaefer held the position of senior designer, art director, and story writer for Diablo. In its sequel, he was the project/design lead, which included work on the game's programming. Schaefer has reflected that he had always favored the idea of a sequel to the original game.
In 2003, Schaefer founded Flagship Studios. After the collapse of the company, he helped start Runic Games with his brother and Travis Baldree. He is currently working on Rebel Galaxy, under development of Double Damage Games (once again founded by him).