Terry Bogard was originally going to be the younger sibling instead of Andy, but for unknown reasons, Terry was made the older brother.

When Hiroshi Matsumoto and Takashi Nishiyama were working on the first Street Fighter game, they created a concept for a "caucasian man wearing a leather jacket" who would later be known as Joe in the final game. This character was originally planned to be the protagonist, going so far as to feature him in the opening sequence. But the idea was dropped, and the team ultimately decided on making Ryu the main character. After their move to SNK, still wanting to use their original concept, they based the design of the lead character on that design. This character ultimately ended up becoming Terry Bogard.

The game was designed by Takashi Nishiyama, the creator of the original Street Fighter, who wanted to make a fighting game that placed more emphasis on the timing of special moves as well as storytelling.

Joe Higashi’s personality was apparently modeled after the lead character from the Japanese show Abarehacchaku.

Geese Howard's design is based on the character King, the main antagonist of SNK's arcade beat-em-up The Super Spy. His name comes from one of the bosses of the same game. Additional inspiration comes from Robert de Niro's role in The Godfather.

Raiden (and his babyface persona in the sequel, Big Bear) is based on the real-life American professional wrestler, Big Van Vader (Leon White), who frequented both Japanese and American wrestling circuits in the 1990's.