Sometime in 1987-88, Sega and the Japanese magazine "Beep!" held a "Story Recruitment Campaign" to let readers submit ideas to be considered for Phantasy Star II. This contest was held both to set a base for the start of development and to market the game to a wider audience on the name value of Phantasy Star, with the game being heavily advertised in Beep! thereafter. Despite the contest's name, Sega accepted any idea and gave out awards for scenario writing, illustrations, and game mechanics. Out of over 2000 entries, 29 were selected as winners and awarded with individually numbered "Associate Planner" certificates. They were also invited to meet with the game's developers for a planning meeting on March 20, 1988 at Sega's headquarters in Otorii, Tokyo, among other prizes. The events of the planning meeting and the top 7 winners were published in the June 1988 issue of Beep!, including a picture of the full roundtable. Producer/programmer Yuji Naka and artist Rieko Kodama were two of the developers in attendance.

Associate Planner No. 001, the Grand Prize winner, was Fumiko Sato. Of the 29 winners, three of them are known to have gone on to work in the video game industry and returned for work at Sega:

• No. 004 was 17-year old Masahiro Sakurai, who won the "Game System Award". Sakurai often recalled the contest without mentioning the game by name, claiming he came up with "something like the action-focused Active Time Battle system seen in JRPGs" before it existed. It's believed that this meeting was what prompted Sakurai to drop out of vocational school to pursue a full-time career in game design, using the award to advance his professional image until he was hired by HAL Laboratory after graduating high school in 1989. Sakurai became known for his work with them and Nintendo, creating the Kirby and Super Smash Bros. series.

• No. 005 was Yukinobu Arikawa, who won the "Game System Special Award" for his entry titled "Those who inherit the legend". While it's not known if he attended the planning meeting, Arikawa would join Sega's AM2 team in 1990 and is still employed at Sega as of 2022. He became known for the comedic touches he adds to the games he works on, having worked as a game designer, writer, localizer and texture artist on different games in the Yakuza: Like a Dragon, Super Monkey Ball, Virtua Fighter, and Daytona USA series.

• No. 011 was middle schooler Keisuke Ōuchi, who described his proposal as being full of "middle school syndrome", but was unable to attend the planning meeting because he lived in the countryside at the time. Ōuchi worked on games as a character designer and graphics artist in various capacities, and created and directed the 1998 visual novel Ojou-sama Express, which similarly to Phantasy Star II held a long-term reader participation contest in the gaming magazine "Dengeki G's Magazine". He also works as a collectors' toy designer under the name Alan Moriguchi, specializing in mechs and robots.

It's unknown if or how any of the winners' ideas were used in the final game, as all of the developers used pseudonyms in the credits and no Associate Planners were credited.

According to early drafts of the game, Lutz from the first Phantasy Star was originally going to be the main character. The plot involved him awakening from cryosleep 1000 years in the future with new powers and a different personality.

In the Japanese release of Phantasy Star II, the piano teacher, Ustvestia, is openly homosexual. When a male party member volunteers to be taught the Musik technique by Ustvestia, Ustvestia replies, "He looks cute." Ustvestia then proceeds to charge the male party member less for the lesson than he would charge a female party member.

However, in the English release of Phantasy Star II, Ustvestia simply says, "He looks smart." The gender-based disparity in the fee for learning Musik is left unexplained.