The game was developed by SNK, where it was designed and directed by Koji Obada. He had previously designed SNK's TNK III (1985), known as T.A.N.K. in Japan and Europe, a vertical tank shooter inspired by Taito's Front Line (1982) that used rotary joystick controls. The same year, Capcom's vertical run-and-gun shooter Commando (1985), known as Senjō no Ōkami ("Wolf of the Battlefield") in Japan, had become a major global arcade hit. Ikari combined the run-and-gun shooter gameplay of Commando with the rotary joysticks and tank vehicles of T.A.N.K.
The game was also inspired by the action film Rambo: First Blood Part II (1985), released as Rambo: Ikari no Dasshutsu ("Rambo: The Furious Escape") in Japan. Obada had originally intended the game to be an official licensed adaptation of Rambo, but SNK were initially unable to acquire the rights to the film. This resulted in the game's title being shortened to Ikari, referencing part of the film's Japanese title. After the game made its North American debut at an arcade game expo, they got in touch with the film's star Sylvester Stallone, who was friends with SNK's president, about acquiring the rights to the film. However, it was too late by that point, as the game had already become popularly known by its Japanese title Ikari among arcade players in Japan and North America, leading to the game being officially released as Ikari Warriors in North America.
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