Kameo started out as a Gamecube game, and was meant to be a launch title. During the development, Microsoft bought Rare, and the title was moved over to the Xbox. After many delays, the title was moved to the Xbox 360 as an exclusive.

In its early stages, when it was a GameCube title being published by Nintendo, Kameo was meant to be a Pokémon-style game where the player could collect hundreds of baby creatures and nurture them to adulthood, utilizing their unique abilities. However, when the game's development was shuffled over to the Xbox platform as a result of Microsoft's purchase of Rare in late 2002, it was decided somewhere along the way to retool the game in an attempt to make it fit the new Xbox demographic, removing the Pokémon aspect and repurposing some of the monsters as additional forms that the protagonist Kameo could take on. In light of this, Rare had also attempted to disguise the fact that Kameo herself was a fairy, as they felt that fairies were too soft for the Xbox demographic, by repositioning her as more of an elf.

It was a direction that creative director George Andreas felt was fruitless in hindsight, and he ultimately now believes that the game should have just been scrapped entirely.