Clayton Jacobson II, a banker and dirt-bike racer who grew tired of crashing into the ground at high speeds and decided to build what he called “a motorcycle for the water,” inventing a stand-up personal watercraft that evolved into the modern jet ski, died Aug. 18 at his home in Byron Bay, Australia. He was 88.

The cause was pneumonia, a complication of his treatment for advanced skin cancer, said his grandson Drü Barrios. Mr. Jacobson had lived in California and Arizona, where he tested and rode his jet skis in the Pacific Ocean and the Parker Strip section of the Colorado River, before moving to Australia about 25 years ago.

A thrill-seeking pilot and motorcyclist with a talent for customizing his own bikes and hot rods, Mr. Jacobson was widely credited with inventing the jet ski, or personal watercraft. Powered by an inboard engine and steered with motorcycle-style handlebars, the watercraft became popular soon after Mr. Jacobson licensed his design to Kawasaki in the early 1970s, leading to the creation of the company’s Jet Ski brand, which popularized the vessel’s name and helped create a zippy new summertime sport. Critics complained that the watercraft were noisy and dangerous, but they emerged as a cheaper alternative to full-scale boats, accounting for more than one-third of all new boat sales by the mid-1990s.

As Mr. Jacobson told it, “the jet ski came about because I needed stress relief.” It was the early 1960s, and he had been working for his father-in-law’s savings and loan business, spending his free time racing dirt bikes in the desert outside Los Angeles. While other riders covered themselves with leather jackets and long sleeves, he avoided most protective gear, trying to intimidate other racers by showing off a muscle-bound physique that he had honed while getting into Southern California’s nascent bodybuilding scene, according to his grandson.

It was a nice look, at least until he was thrown from his bike near Perris, California – by some accounts, he was in the Mojave Desert – and found himself tending to his wounds from the bottom of an irrigation ditch. “I was picking the gravel out of my skin and cleaning the blood off,” he later told the Associated Press, “and I said, ‘There’s got to be a better way.’ ”

In search of “a softer landing,” he turned to the water, later writing that he wanted to “enjoy the exhilaration and excitement of a motorcycle without the inherent danger of falling onto hard ground at high speeds.”

His creation had a few ill-fated precedents, including a propeller-driven “water scooter” called the Amanda that was manufactured by Vincent, a British motorcycle maker, in the mid-1950s. Unlike the Amanda, Mr. Jacobson’s version was ridden while standing up and used a jet pump, not a propeller; it also featured an aluminum body, a fixed handle pole and a two-stroke engine from West Bend.

By 1966 he had improved on his design, making a second prototype out of fiberglass. He quit his day job, filed his first patent for a “power-driven aquatic vehicle” and started shopping his invention to manufacturers. Eventually he linked up with the Canadian company Bombardier, which was more interested in the sit-down version of his watercraft, viewing it as a summertime counterpart to their Ski-Doo brand of snowmobiles. They released the original Sea-Doo in 1968, marketing the mustard-yellow vessel as a “jet-powered aqua scooter” that could go 25 mph but was “virtually unflippable.” It was, they said, “the new goin’ thing on water.”

But the watercraft never quite got going. It was discontinued after two years, and Mr. Jacobson signed a new licensing agreement with Kawasaki, leading to the creation of the company’s first Jet Ski models in 1973. Painted the color of pea soup, the stand-up watercraft weighed about 220 pounds and relied on a 400cc engine. The company released two different models, one with a flatter, more stable hull and the other with a V-shaped bottom that enabled riders to cut sharply across the water.

“The first ride on it, it was worse than a wild horse,” said Fred Tunstall, a veteran Kawasaki employee who helped develop the jet skis, in a 2000 interview with Boats.com. “But after you spent some time getting used to it, it turned into a lot of fun.”

Over the decades, advances in cockpit, engine and hull design helped spur the jet ski’s popularity. The Sea-Doo was reintroduced by Bombardier in 1988 and became one of the world’s most popular boating brands, and rival watercraft were introduced by companies including Yamaha, where Mr. Jacobson eventually worked as a consultant. Competitive jet-ski racing also became popular, with more than 30 countries represented in world championship events, according to Scott Frazier, the head of the International Jet Sports Boating Association.

In a phone interview, he called Mr. Jacobson a “patriarch” of the sport, crediting him with creating what became the first mass-produced personal watercraft. “He came up with an incredible idea,” Frazier wrote in an online tribute, “and carried it to a height that earns him a place in history comparable to some of mankind’s greatest commercial inventors.”

Mr. Jacobson’s role in the development of the jet ski was the subject of a two-decade dispute with Kawasaki, which ran advertisements saying that the company, rather than the motorcycle-riding inventor from California, had created the vessel. In 1989, he filed a lawsuit for libel and slander of title, claiming that Kawasaki had improperly obtained jet-ski patents in Japan and wrongly credited its employees with developing the watercraft. A federal jury awarded him $21 million in damages two years later, although he said he had been looking for much more – $30 million to $60 million, given the fortune that Kawasaki had made from jet skis.

Less than two months later, a federal district judge in Los Angeles overturned the award, saying there was insufficient evidence for the claims against Kawasaki. A new trial was ordered, and Mr. Jacobson settled with the company’s American subsidiary in 1992. He was awarded a cash payment – the amount was not disclosed, but his grandson said it was roughly “a couple million dollars” – and issued a joint statement with the company, acknowledging that Kawasaki had made important contributions to the watercraft’s development. The company’s vice president of marketing, Robert Moffit, acknowledged in turn that Mr. Jacobson was “widely known as the inventor of the first stand-up personal watercraft.”

“Indeed,” he added, “without Mr. Jacobson’s invention, Kawasaki’s Jet Ski brand of personal watercraft would not have been developed.”

The younger of two children, Clayton Junior Jacobson was born in Newberg, Oregon, on Oct. 12, 1933. According to the family, there was a misunderstanding when his name was taken down, and he legally dropped his middle name as an adult. His father was a traveling salesman who later worked for Kellogg’s, and his mother was a homemaker. Both parents were the children of Norwegian immigrants; Mr. Jacobson considered himself a modern-day Viking.

He grew up in Southern California, graduating from high school in Los Angeles, and worked in the wholesale food industry before marrying his first wife, Dianne Edwards, and joining her father’s business, Southwest Savings and Loan.

By then, he was racing hot rods, building cars and motorcycles, and off-roading in Mexico. He later worked with auto engineer Gerald Wiegert on the design of the Vector sports car; circumnavigated the globe in a Cessna seaplane in his early 60s; and designed several buildings, including his light-filled home in Parker, Arizona, and his two-story garage in Australia, which included “a prototype of a flying jet ski that never really came to fruition,” said his grandson.

He also self-published an autobiography, aptly titled “Jet Ski Inventor Autobiography,” in 2013. If a person’s ego is defined as their “appropriate self worth,” he wrote, “mine is about the size of my Ford F250 pickup truck.”

His marriage to Edwards ended in divorce. He later married Lee Anne McMillan, his partner of 35 years. She survives him, as do four children from his first marriage, Karen Jacobson, Margo Orona, Tava Mericle and Clayton Jacobson III, a competitive jet-skier; five grandchildren; and many great-grandchildren.

In keeping with his wishes, Mr. Jacobson was cremated as part of what he considered to be a traditional Viking funeral. He was dressed in his usual attire: Levi’s jeans, a puffy Oakland Raiders Starter jacket, a Parker Strip T-shirt and a pair of clogs. Then, in what his grandson described as a nod to ancient tradition, “they put his hand in a bowl of hazelnuts and gave him his Buck knife, which was his closest thing to a sword, and sent him off to Valhalla.”