In an interview with LEGO Island's creative director Wes Jenkins from around 2013, he revealed that Mindscape fired the game's entire development team the day before the game was released in order to avoid paying promised bonuses:

There are six audio files on the game's disc containing unused dialogue for the Infomaniac. These voice lines include:

• Two lines where he says to put the disc back into your computer, as if you had ejected it. These sounds are never played, as the game will crash when ejecting the CD.
• One line where he warns you about entering a duplicate username, which in the final game will result in just using the already existing user, instead of overwriting it as suggested by the audio clip.
• Three lines where he describes scrapped, more complicated features for an earlier version of the registration book, including manual saving, loading, or starting a new game where you would be asked to click on red or green bricks. In the final game, you start a new game by typing in your name, load a game by clicking on a checkmark, and the game auto-saves. The red and green bricks were only used when asking if you want to quit the game.

A hastily edited version of one of the lines intended for CD removal is used in the cutscene that plays if the executable file is lauched without the CD inserted, where the word "back" is noticably removed from "Whoops! you have to put the CD back in your computer". Foreign language dubs of the game do not have an awkward cut, though some retain references to the CD being returned to the computer as opposed to simply being put in.

In the E3 1997 demo reel for LEGO Island, an early version of the bad ending is shown, which is significantly longer than the final game's ending scene, showing situations such as a motorcycle breaking down, minifigures losing their heads, an ambulance falling into a river, a minifigure getting their leg bitten by a shark, a homeless minifigure begging for change, and the Information Center experiencing a fire. The final game significantly shortens this to just the Brickster contemplating what he's done in front of the town debris, likely as the original ending was deemed too depressing for small children.

Lego Island had a large quantity of content that was planned, but never inserted into the game. Content ranges from entering every building including Pirate's Cove, expansion packs that would allow the player to visit an undersea location, and the helicopter as a more viable form of transportation. Most content was cut due to time, budget, and technology constraints.

There is an unused prerendered cutscene that shows the Power Brick flying off the top of the Information Center to heroic fanfare.