According to designer and writer Yuji Horii in a 1987 interview, Dragon Quest III first began development at a big company retreat in the town of Hakone in January of that year.

In a 1989 interview with designer and writer Yuji Horii and director Koichi Nakamura, they discussed their focus on enhancing the player’s experience in combat and storytelling. Nakamura explained that they wanted to make battles more enjoyable and less repetitive, moving away from the grind-heavy nature of older RPGs. He highlighted that the team worked to ensure each battle felt engaging, and tried to prevent the common tendency of players to run from strong enemies due to the monotony of repeated encounters.

They also discussed the expanded battle options in Dragon Quest III, including a greater variety of spells, the ability to attack party members, and character positioning in the lineup having an effect on battles. They emphasized that even support spells, which were often underutilized in previous games, had been made more "effective in their own right". They believed every spell in the game now served a meaningful purpose, adding depth to combat, and contributing to their goal of creating an experience where players would be curious and eager to experiment with different strategies.