Resident Evil 2 was developed by a team of about 45 people at Capcom, starting in early 1996, a month after the first game finished. Hideki Kamiya directed, and producer Shinji Mikami had creative disagreements with him before stepping back into an overseeing role and asking to see the latest build once a month. Development cost more than a million dollars. The Raccoon City Police Station was based on the Osaka City Central Public Hall. A first version, shown in July 1996 and later called Resident Evil 1.5 by Mikami, differed a great deal from the finished game, released in 1998.

Hampi is a UNESCO World Heritage Site in Karnataka, India, with more than 1,600 surviving remains spread over 4,100 hectares. It was the capital of the Vijayanagara Empire from 1336 to 1565. Travellers from Persia and Portugal described it as a prosperous, wealthy and grand city with temples, markets and farms along the Tungabhadra River. By 1500 it was estimated to be the world's second-largest city after Beijing, and probably India's richest at the time. In 1565 a coalition of Muslim sultanates defeated the Vijayanagara Empire, its capital was conquered and destroyed, and the city was left in ruins. Hampi remains a religious centre, with the active Virupaksha Temple at its heart.