According to senior programmer Robert Leyland, developer Big Ape Productions had little experience with fighting games before working on The Simpsons Wrestling, having previously specialized in 3D platformers and top-down action-adventure games. This inexperience would be worsened with numerous setbacks, starting with a demand from executives at Fox Interactive and Activision that the game should remain exclusive to the PlayStation despite the burgeoning sixth generation of consoles, believing it would reach a larger audience of children due to the console's established install base. However, the game's real-time cel-shaded outlines, fast-paced gameplay, and visually detailed arenas burdened the PlayStation's hardware, which struggled to reproduce the TV show's art style while maintaining smooth performance.

The team also encountered creative difficulties with the writers and voice actors from the TV show. Knowing they were working on a wrestling game, many of the early scripts and recorded lines reportedly contained humor and dialogue that the developers felt was too vulgar for either the show or a children's video game. According to Leyland and level designer Michael Ebert, the script was revised multiple times before they reached an acceptable tone. The publishers also requested several design changes reportedly stemming from concerns over recognizable Simpsons characters attacking each other, including removing an animated character select screen with wrestlers taunting and fighting each other before matches.

The team originally only had about a year to finish development in time for the 2000 Holiday season, but midway through production, the project's producer unexpectedly resigned, forcing them to reorganize their workflow and delay the game into 2001. Although it sold decently, it was critically panned and struggled to compete against fighting games on newer hardware, contributing to the shut down of Big Ape Productions and prompting Activision to end its publishing relationship with The Simpsons license.

The Itchy & Scratchy Game, The Simpsons: Itchy & Scratchy in Miniature Golf Madness, and The Simpsons Wrestling are the only instances in The Simpsons franchise where Scratchy manages to successfully defeat Itchy on-screen.

Originally, the character select screen was supposed to have the characters taunt one another and reach through the screen to slap one another. Fox specifically asked to replace the 3D characters with concept art from the series.