Running with Scissors wanted to make "the most outrageous game they could", and began work on Postal after being inspired by Robotron: 2084. In 1997, they filed a trademark for the word "Postal" in the area of electronic gaming, but were soon counter-filed by the United States Postal Service, who claimed to be moving into video games: Marvin Travis Runyon, the United States Postmaster General at the time, even sent Running with Scissors a latter condemning the game's theme. The legal battle was ultimately dismissed with prejudice in June 2004.

The theme was also highly controversial not just within the larger media, but also within the video game industry. This was a surprise to CEO Vince Desi, who felt Postal was more comical and over-the-top, and stated that the game was not meant to be taken seriously. After it was released, Postal was targeted by Senator Joe Lieberman, who called the game "one of the worst things in America". Additionally, retail chains such as CompUSA and Walmart refused to sell the game.