The prototype version of the game was a side-scrolling beat 'em up titled Survivor. It would have only used core characters from the Art of Fighting and Fatal Fury series. The original idea was eventually abandoned and changed into a fighting game since they liked the concept of the two-series crossover. Characters from Ikari Warriors and Psycho Soldier were also added to the roster. The concept of a three-man team was one of the ideas kept from the side-scrolling version.

The title “The King of Fighters” was originally the subtitle used for the first Fatal Fury game, Fatal Fury: King of Fighters; according to GameSpot, the developers picked the name to become its own game because they liked it.