Development of Dino Crisis began in late 1996. In the first few months of production the game went through significant changes, having originally been set in a jungle environment and the player fighting off snakes and gorillas, which Shinji Mikami is credited as replacing with dinosaurs. Development was put on hold at the start of 1997 when Production Studio 4 needed more people to work on Resident Evil 2 so it could be completed ahead of a delayed May 1997 deadline. That game re-started development, instead, and staff returned to Dino Crisis.
To properly render the graphics, Studio 4 created an entirely new engine which at the time of release was not expected to be used for any other games. The engine allowed for the team to implement animations to make the skin move.
AI development for the dinosaurs was handled by Miyuki Ohiro and Yuji Hagiyama. The two operated independently, with one working on the larger dinosaurs and the other on the small dinosaurs. Studio 4 did not look into palaeontological research on each species' strengths and speed, and instead judged their stats based on their role in the game.
The game's backstory and script was entirely written in-house by the planning department, and lasted over a period of two months.Shu Takumi was put in charge of writing the first half of the story; he for a short time been the game's director, but inexperience led to him being replaced with Shinji Mikami.Kuniomi Matsushita and Hiroyuki Kobayashi served as co-writers.