Atlantis was founded in the wake of the Kherubim arrival on Earth. There, they discovered that an alien race called the D'rahn were already there. The Kherubim allied with the D'rahn against the Daemonites, founding the kingdom of Atlantis. Atlantis was, much like its New Earth counterpart, an oasis of civilization in prehistory. However, the Kherubim Lord S'ylton of Atlantis realized that the carnivorous D'rahn were worse than the Daemonites. He turned on them, and the War of Atlantis began. S'ylton, along with three mages, Haroth, Azrum and Tapestry, trapped the D'rahn leadership in the Pyramid of Atlantis, and sacrificed his life while the mages cast the spell which sent the D'rahn to sleep. Sometime during the War, Atlantis sank.
Millenia later, Haroth tried to double-cross his fellows by by reversing the spell. Part of the spellrequired that Atlantis be briefly raised. It's current status is unrecorded; presumably it sank again.