The story was initially supposed to just be an escape chronicle from an infected Raccoon City, It was also toyed with at one point for the player to be able to control a zombified Brad Vickers, tying into his appearance in Resident Evil 2. However, because the game was only intended to be a low-cost side-story, it was decided that the production lacked enough funding to build it.
At some point in the development of the game, the Chimera and Neptune - two B.O.W.s that appeared in the original Resident Evil - went through the planning phases, though were eventually dropped. Another rejected noteworthy enemy is the Zombie Wildcat.
The game's story was intended as a standalone expansion to the Resident Evil 2 story, rather than an entirely new setting in itself. Initially toying with a new cast of characters, Shinji Mikami and Kazuhiro Aoyama agreed to go with an established character and made Jill Valentine the protagonist. Valentine had until that time been planned as the protagonist of Resident Evil CODE: Veronica until being replaced by Claire Redfield.
Unlike the majority of the early scripts in the series, the scenario of the game was not created by Flagship employees but by internal Capcom writer Yasuhisa Kawamura, who was just recently hired by Capcom. Kawamura's intention for the game was to further explore the Resident Evil universe, and explored the idea of two competing Umbrella companies, Umbrella USA and Umbrella Europe, committing acts of industrial espionage on one another. Lifting ideas from Flagship's drama albums, Kawamura established in the game that the Raccoon General Hospital was working on a t-Virus vaccine and that the people of Raccoon City were infected because of contaminated water. As Flagship was ultimately in charge of the franchise lore at the time, Kawamura's script and the storyboards were proofread to avoid continuity errors with other installments in production (both Resident Evil CODE: Veronicaand Resident Evil 0), an issue that was also given attention in monthly meetings between all directors and producers. Despite this, one major change was allowed in the destruction of Raccoon City; whereas Flagship intended the city to be destroyed by napalm, Kawamura instead insisted on an experimental fuel-air bomb, inspired by his love of Neon Genesis Evangelion.
The game went through at least four names during production, outside of its fifth international title. During development it was known as both "BIOHAZARD GAIDEN" and "BIOHAZARD 1.9", the former to bring to attention its intended role in the series as a standalone game, and the latter to reference is closeness to Resident Evil 2.
Another game was being developed by Production Studio 4 at the time called "BIOHAZARD 3", produced by Hideki Kamiya and featuring HUNK on a cruise ship. When that game was moved to the PlayStation 2 with an expected 2001 release, a gap emerged where there would be no major non-exclusive title until then, CODE: Veronica and BIOHAZARD 0 being advertised as Dreamcast and Nintendo 64 exclusives, respectively. Capcom took the decision to change the titles of Aoyama's and Kamiya's games, with Aoyama's becoming "BIOHAZARD 3", later "BIOHAZARD 3 LAST ESCAPE", and Kamiya's becoming "BIOHAZARD 4", respectively. The name change to include a 3 was controversial, and Shinji Mikami offered his resignation to Yoshiki Okamoto, believing that the game would be judged harshly if treated as a major title in the franchise.
The game apparently had a different slideshow Opening to the final game, early images depict S.T.A.R.S. Members Jill, Barry, Chris, Rebecca, and Brad arriving on the Heliport of the Raccoon Police Station directly after the mansion incident and in one image Jill is seen arguing with Chief Irons with other S.T.A.R.S. Members beside her, in the last image Jill is seen wearing a white coat while dressed in casual outfit, the image would fade from a healthy and normal Raccoon City into a destroyed one.
A chain puzzle, set in downtown was removed from the released game, the player would place the chain in place of the fire hose to be able to take the hose along (otherwise the ladder would remain tucked up), the area was slightly altered where there was no crate in front of the Kendo van and the door was opened with the downtown map placed inside it. in the final game, a crate was placed in front and the van's door was closed, the map is now pinned on the wall.
Early status profile picture of Jill and inventory icons for handgun and others can be seen which were completely replaced in the final version.
Dodge features were not present in early builds (E3).
Different early models of Jill can be found in the final game, were meant to be used for character select like Mercenaries (PLXXCH.PLD), several other characters like Brad, Dario and Tofu are leftover in the game as PLD Files (Player Data), can be played with using hacks or mods. Possibly suggesting that they were initially intended to be playable.
Several items in the final game were also left unused, given the name "BOTU" Just like the chain, where it was actually named "Chain" in the E3 Version.
"Biohazard: Last Escape" was featured in the March 1999 Tokyo Game Show. Unfortunately for journalists and gamers-alike, only a video demo was available - not gameplay. It was in April that Capcom confirmed specific parts of the plot - namely that it would involve an "unlikely hero" (confirmed in-game to be Carlos Oliveira) and be set both the day before and after Resident Evil 2's story. It was confirmed by Capcom that the game would, indeed, be available on the PlayStation console.
When Dino Crisis was released in Japan in July, Capcom managed to run out of units for there and had to manufacture a second shipment. Expecting high-sales in the United States, the western shipments of the game included a brief demo of Resident Evil: Nemesis. Three months before the initial release - making it around late June - the name was changed to officially have the number '3' in its name, which project supervisor Yoshiki Okamoto later explained as a means of keeping the titles of the first three games on the PlayStation console consistent.
In September and October, Famitsu Magazine and IGN published enemy attack stats for the game, along with move-sets, along with releasing a number of screenshots relating to the individual enemies. Later in mid-October, Capcom declared its intention to spend $20 million on advertising campaigns for the PlayStation versions of Resident Evil 3: Nemesis and Dino Crisis, as well as the Nintendo 64 port of Resident Evil 2. In November, Capcom confirmed that the US-version of the game was being shipped earlier than initially-expected, ready to be bought in stores as early as November 10 or 11. As journalists, IGN had managed to get their hands on a copy early, which they used under scrutiny with a "chipped" PlayStation.