The game was originally planned to have players explore an ambitious open-world Gotham City as Batman while making use of his vehicles. It was planned as a Nintendo GameCube exclusive before expanding to include Xbox and PlayStation 2 versions, the latter of which was cancelled well before completion.

According to designer Dave Vout, the problems with the game's development began with producer Yuki Takafumi, a TV and film producer who was working on his first video game while managing a team spread out across multiple continents. He was said to be more involved with the game's cinematic CGI cutscenes and orchestral score than helping design the gameplay early on. While preparing the GameCube version, the team discovered that much of the game's code was running through a Game Boy Advance emulator. Vout speculated that the game may have originally been intended for the GBA before shifting to the GameCube, leading them to rely on temporary technical fixes that remained in the game longer than expected.

Development was also slowed by a management structure that required nearly every design proposal to be approved by a large committee before work could continue, as well as creative disagreements between publisher Kemco and DC Comics. Former DC editor Scott Peterson recalled that some of the Japanese developers proposed ideas that conflicted with Batman's characterization, including one where he could distract enemies by playing salsa music from a boombox. Peterson cited it as an example of a cultural disconnect between the developers and the original source material.

Kemco had few resources available to market the game and tried to rely on positive word of mouth to attract players, which proved unsuccessful. The poor sales led Kemco to significantly reduce console game production and instead focus on smaller mobile role-playing titles, while HotGen shut down not long afterward.