Centipede was developed by Dona Bailey and Ed Logg. Bailey previously worked as a computer programmer for General Motors. She was hired as the sole female programmer in Atari's arcade division, and recalled having to grow a "thicker skin" to adapt to the dominant male work culture. Centipede was the only released game she worked on before leaving Atari in 1982; she chose to work on it after reading an internal notebook of game ideas and concluding it was the only nonviolent idea:


According to Logg, he initially worked on the game as Bailey's supervisor, and was busy as the lead developer on another project:


Incidentally, Centipede was also one of the first arcade games to attract a sizable female audience; Simon & Schuster's 1982 guide "How to Win Video Games" estimated that the game appealed to a 50/50 ratio of men and women, hypothesizing that "Cuteness overcomes most people's squeamishness about bugs." Bailey heavily used pastel colors in the game's sprites to make it "visually arresting", and felt it was a "new emphasis" in video games. Logg believed the game's wide appeal was because its design was not biased to one gender demographic like other genres, and he was unsure "that without Dona's viewpoint it ever would have made it [to the women's market]."

There is an unused graphic of a grasshopper saved in the game's memory. According to the developers, it was to serve the same role as the Spider does in the final game.