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The second disc of the game has long been the subject of controversy due to its seemingly unfinished nature, where Fei and Elly sit in an empty area and narrate the remainder of the game's events as they are shown in a slideshow/montage format, with lengthy dialogue scrolls in front of them and little actual gameplay compared to the first disc. For almost two decades since the game's release, there was seemingly no official explanation about the production of the second disc, and fans believed that director Tetsuya Takahashi had more ambitious plans that the development team was forced to ditch because of budget and time constraints imposed by Square.

In a 2017 Kotaku interview with Takahashi, he revealed that while this speculation was correct, there was more to it than that:

"Honestly speaking, what had happened is Xenogears as a project was staffed pretty much entirely out of new staff members, young staff members... Back then, we had the direction of, ‘All projects take two years and that’s when we need to get it done.’ So on top of developing the game, we had to nurture and teach and grow these younger employees. Things like 3D were extremely new, which led to some delays in the schedule. It just wasn’t possible to get everything done."

The higher-ups at Square, when seeing that the team would not be able to reach the deadline in the state they were in, suggested that Takahashi end the game after the first disc when Spoiler:Fei and his team escape from Solaris. However, he did not feel the game's story should have ended there even with the lack of gameplay:

"It was a rough way to end it, and I felt like if we do that, then the players will not be satisfied... so we had a proposal—I proposed that if we do disc 2 in this way that it turned out to be, we can finish the game with the current number of staff and the current time allotted for the schedule and the remaining budget we have."

"I do think my decision was the right one to make, because if we had just ended at Disc 1 it would have been bad."

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