Shigeru Miyamoto and Gunpei Yokoi originally envisioned Donkey Kong as a Popeye game, specifically based on the 1934 cartoon "A Dream Walking", where Popeye and Bluto fight over Olive Oyl as she sleepwalks through a construction site. However, the game was retooled into an original IP due to technical limitations. Yokoi explained during the 1983 court case Universal City Studios, Inc. v. Nintendo Co., Ltd. that "In those days we could not depict or draw the character of Popeye using the circuit in those days [sic] properly", something license owner King Features had been particularly picky over in that time frame.

Following the removal of Popeye iconography, Miyamoto used the franchise's characters as inspirations for their replacements. Mario took the role of the titular sailor, Pauline filled in for Olive Oyl, and Donkey Kong stood in for Bluto. Nintendo would eventually release a Popeye game a year after Donkey Kong in 1982.

When Donkey Kong became popular, Nintendo was sued by American film company Universal Studios over allegations that Donkey Kong was plagiarizing their 1933 film King Kong. Lawyer John Kirby, defending Nintendo, pointed out that Universal was aware of and had previously argued in court that the story of King Kong was in the public domain due to the film's novelization, which came out before the film and marked the first non-promotional appearance of the character, failing to have its copyright notice renewed. As a result, Universal lost the case. Nintendo lavishly awarded Kirby by taking him, his wife and some associates to dinner at a fancy Manhattan restaurant, giving him a sailboat named "Donkey Kong" and the exclusive rights to the name Donkey Kong for sailboats as a strange show of gratitude.

In a 2011 interview with Game Informer, Shigeru Miyamoto stated that "Kirby" was one of many candidates on a list of names that were proposed for the then-in development video game character, and upon seeing it, he recalled John Kirby and felt that a connection between the two would be amusing. However, the name was picked not as a tribute to the lawyer, but rather because the harsh-sounding nature of the name was a comedic contrast to the character's soft, cute design.

Before Universal Pictures was alerted to Nintendo's Donkey Kong, leading to the very well-known lawsuit that Nintendo won, Universal licensed out the rights to the 1933 film King Kong to Tiger Electronics for a handheld LCD game, with Tiger's higher-ups being under the assumption that Donkey Kong was a licensed spin-off and not a derivative work. When the lawsuit began, Universal reworked their license with Tiger to be non-exclusive, demanded changes to Tiger's King Kong game to work less like Donkey Kong, and began releasing King Kong games on other platforms such as the Atari 2600. This was not done for monetary gain, but to try and prove that Donkey Kong's use of similar concepts was damaging their products. When Universal lost the suit, Nintendo opted to claim the royalties that Universal felt it was owed instead of claiming damages from Tiger, a move which could have been potentially lethal for Tiger.

In a 1984 commercial promoting Donkey Kong-brand cereal, Mario can be heard with a distinctly Italian accent, even saying what would become one of Mario's catchphrases "Here We Go". This predates Charles Martinet portraying Mario with an Italian accent by 7 years.