According to game designer Atsushi Tomita, the team chose Morrigan as the representative for the Darkstalkers series, because of her popularity and a desire to add more female characters to the game. The team gave her new moves that matched her nature as a succubus, because they felt that her moveset in her home series had nothing succubus-related due to her originally being designed as a female vampire.

Scrapped ideas for potential characters included Howard the Duck (cut because the director felt Norimaro already filled the gag character role in the series and the failure of the Howard the Duck movie), She-Hulk (cut because the fourth-wall shenanigans wouldn't fly in arcades and she'd be a slightly-worse Hulk otherwise) and Spider-Ham (who Capcom USA suggested instead of Howard the Duck. He was cut for the same reason as Howard). She-Hulk later appeared in Marvel vs. Capcom 3: Fate of Two Worlds.

Galactus was considered as a potential final boss, but was cut as Marvel said that "a god-level entity like Galactus isn't someone the heroes could just beat up". Katsuya Akitomo objected to this, saying that there was a precedent for the heroes physically defeating Galactus in 1982's Fantastic Four #243. He tried to reasonably explain that they would establish that Galactus was starved, and that they really wanted to recreate this classic event in the game, but they stubbornly said no. Galactus later appeared in Marvel vs. Capcom 3: Fate of Two Worlds as the final boss of the game.

Iron Man was supposed to be included in the game as a fighter, returning from Marvel Super Heroes, but was cut because another company (most likely Acclaim, who made Iron Man and X-O Manowar in Heavy Metal two years prior) had an exclusive limited time license on the character. War Machine, who in the game is a palette swap of Iron Man's sprite, was used instead.

In the Japanese version, Morrigan has a victory pose that shows her in a revealing dominatrix outfit along with Lilith tied up with a rope, which was censored in the International version. However, her victory pose does appear in the International version of Marvel vs. Capcom 2: New Age of Heroes.

In the games files are graphics for an unused assist character. This was Tomichin, a cartoon character invented by one of the game's developers.

The Japanese version contains 2 lines during one of Mega Man's winning poses that are not present in the Western versions, where Dr. Light will either simply congratulate him or offer him cake. These lines were later restored for the PlayStation version of the game.