In December 2023, Level-5 revealed in a slideshow document submitted to a Japanese government study group that that they had used generative AI programs such as Stable Diffusion to assist in game development and promotion, detailing examples of how it was used in titles such as Megaton Musashi: Wired, the Yo-kai Watch series, and Inazuma Eleven: Victory Road. The company's AI usage would soon become the center of numerous controversies, such as accusations that the teaser trailer for Holy Horror Mansion used AI-generated artwork and that the company was using it to write 80% of their game's code. While founder and CEO Akihiro Hino would deny the latter claim as being in regards to "an unreleased title themed around AI", he also defended the usage of AI despite accusations of plagiarism, comparing it to how knives and computers could be used for both helpful and harmful means. A game showcase the company released in 2026 also drew criticism for its significant use of AI-generated visuals outside of game trailers, prompting Hino and Level-5 to each issue apologies for "causing distrust" with their utilization of the technology.