Neopets: Tales of Dacardia originally began development under the codename "Neopets X", with a demo being publicly revealed at San Diego Comic Con 2019. In 2020, the game went into open beta testing under the name Neopets: Island Builders, and was eventually released in 2022. However, after Neopets' parent company JumpStart dissolved in 2023, the game was rebranded into Neopets: Tales of Dacardia, which went through further development until its re-release in 2024.

Draik, Hissi, Xweetok, Scorchio, and Lenny were all Neopets planned to be included in the game, but never were. Some versions of the game have models and unmapped textures of these pets present, but they were all removed by February of 2022.