Islam recognizes the existence of the jinn, which are sentient beings with free will that can co-exist with humans and are not all evil as demons are described in Christianity. The creation of Jinnkind preceded that of mankind. They exist in what is known as the Al-Ghaib (unseen or unknown) realm or world, they have the ability to see us but we can not see them. Angels also exist in this realm, as well as the human soul (hence why it can not be seen leaving the human body in death). The Jinns are made from the smokeless flame of fire and both angels and the human soul are made from light, whilst the human body is made from clay. This "fire" and "light" is beyond matter, however what ever exists in this realm is made from matter. In Islam, the evil Jinns are referred to as the shayātīn, or devils, and Iblis (Satan) is their chief. Iblis one of the first Jinn (he is not considered an Angel in Islamic Cultures) who disobeyed Allah (God) and did not bow down before Adam.
According to the Qur'an, when Allah (God) created Adam from clay, all the angels and Iblis himself was ordered to bow before Adam as humans are superior to any of Allah's (God's) other creations. Iblis became very jealous and said that humans are not the superior creations but jinns are as they are made of fire and humans are made of clay and he disobeyed Allah (God).
Adam was the first prophet and deputy of the human race, and as such was the greatest creation of Allah (God). Iblis could not stand this, and refused to acknowledge a creature made of "clay" (matter). Allah (God), thus, condemned Iblis to be punished in the hellfire. But Iblis asked for respite until the last day to which Allah's (God) agreed, but warned that he and all who would follow him in evil would be punished in hell. Allah (God) also stated that Iblis would only be able to mislead those who have forsaken Allah (God) and not the righteous believers.
Adam and Eve (Hawwa in Arabic) were both together misled by Iblis into eating the forbidden fruit, and consequently fell from the garden of Eden (allegorical) into a state of degeneration.
Jinns are not the "genies" of modern lore. Like man, there are good and bad, believers and non-believers amongst them. The evil Jinns have been known to possess human beings or enter a humans life in order to hinder it. Its actions would be that of a poltergeist in western understanding. Contrary to the evil Jinn, the good Jinns are muslim (servants of good) and can enter a human life in order to help them in numerous ways. The entry to our realm is forbidden without Allah (God's) permission. Both the Angels and Jinns can enter in the form of a human being or an animal. As Angles do not posses free will and the good Jinn are obedient, they never enter without Allah's (God's) permission. However, the same can not be said for the evil Jinn who enter as they will and have been known to take the form of many animals (esp black Dogs and Snakes) and human beings.