The concept for Shipwrecked 64 first came about in 2016, when creator Squeaks D'Corgeh was making fangames based on Five Nights at Treasure Island, a Five Nights at Freddy's fangame featuring Disney characters. In 2020, he scrapped the Disney characters and replaced them with original characters, those being Bucky Beaver and his friends. He dropped the project for some time, but was reminded of it again after discovering a satirical Super Mario 64 Iceberg Tiers meme. The deepest fact below the iceberg, asserting that "every copy of Mario 64 is personalized", inspired the gameplay loop for Shipwrecked 64. He would restart development in 2021, which would ultimately lead to the version of the game released on Steam.

The game's developer Squeaks D'Corgeh has openly expressed disdain towards the "mascot horror" genre, claiming that most games in the genre are bad and expressing disappointment towards "genuinely good ideas" being wasted, particularly highlighting that many games primarily use the same gameplay loop. In that regard, when making Shipwrecked 64, he wanted to prove that there was more that could be done with the formula, and he claimed that he didn't want to hold back on anything, stating "I either go all the way, or I just don't go at all."

Two of the game's achievements are references to popular memes. The first, titled "WHERE'S THE LAMB SAUCE" (awarded for failing Giovanni Goose's minigame), is a reference to the American adaptation of British reality show "Hell's Kitchen": in an episode from 2006, Chef Gordon Ramsey berates a kitchen full of chefs, demanding to know where the lamb sauce is for a dish being made. The second, titled "A Happy Little Accident" (awarded for clearing Stumbler O'Hare's minigame), is a reference to the art instruction show "The Joy of Painting": host Bob Ross was famous for the phrase "We don't make mistakes, just happy little accidents," which is often seen as a guiding principle for the unpredictable nature of life.

Originally, the game was going to have a "Nightmare Segment", where after Bucky falls asleep, he would find himself in a strange place being hunted by a Vulture, representing his fear of death. If Bucky was caught during this sequence, he would sleep in by three hours, hindering the player's time to escape the island. It was scrapped because creator Squeaks D'Corgeh couldn't find a good gameplay loop to justify the segment's existance, and didn't want to add any filler content.

An unused cutscene in the game has the character Stumbler O'Hare openly mock Harley Mullins (the wife of Mark Mullins) and her situation. This was scrapped both for being "WAY too on the nose", and because Stumbler's personality was altered during development. The cutscene would be replaced with a YouTube video titled "How to say Goodbye", in which Stumbler, despite knowing about Mark's crimes, tries to help him grieve over the loss of Harley. Despite the cutscene's removal, Stumbler's statue in The Dam still has him wearing a nurse's cap like in the cutscene.

As revealed by Squeaks D'Corgeh, the Spoiler:Dwellers are not "patrolling enemies". The reason why players are so easily spotted by them is because they are always tracking the player's location: they receive a ping on your location, head there, then check again and head to wherever you are now. The only time the Spoiler:Dwellers ever "wander" is when the player is hiding in one of the numerous barrels scattered throughout the area.

Throughout development of Shipwrecked 64, Squeaks D'Corgeh would make references to a non-existent character in the game named "Duncan Dolphin". This even included a fake death animation for a character named "Drake Dulfin" (likely intended to be the Spoiler:Starling counterpart of Duncan) being shot in the face by Spoiler:Brandon Lester in his Bucky Beaver costume in what appeared to be a Wild West-esque setting. This continued after the game's release, where one of the patch notes for the Hotfix 2 update stated "Removed Duncan Dolphin", likely as a reference to the "Removed Herobrine" gag seen in updates to Minecraft.

However, on April 1st, 2024, an April Fools update was released that added Duncan to the game as a New Game+ bonus. If the game's True Ending has been reached, he will appear in The Theater at Midnight and ask Bucky for help activating his "New. Radical. Mechanism!!" due to losing the trinkets needed to make it work. This will take the player to a new area called "Garten of Duncan", a recreation of the Testing Sector from Garten of Banban made using assets from The Plaza. Clearing the map will take the player to a previously unused location called "Layer 4 Elevator", where an audio tape reveals that the player can input console commands to access other unused locations as part of the update. Entering the door will take the player to another new area, known simply as "Sample Area", but only a few seconds after entering the player will be kicked out to the encounter with the Spoiler:Studiogrounds Husk at the end of the game.

Notably, in the "Layer 4 Elevator" area, Chief Wulf can be seen on top of the tallest building in the area. If the player uses console commands to reach him, he can be spoken to, revealing that Spoiler:he has relived the same days over and over again, watched Stumbler O'Hare die over and over as part of that, and believes that he will be forgotten after his death.