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Final Fantasy XV was primarily developed by Square Enix's Business Division 2 studio. Additional studios that helped with development included HexaDrive, XPEC Entertainment, Plusmile, Umbra, and Streamline Studios. Staff included director Hajime Tabata; producer Shinji Hashimoto; main writer Saori Itamuro, who wrote the scenario based on the original draft by Kazushige Nojima; and art directors Tomohiro Hasegawa, Yusuke Naora and Isamu Kamikokuryo. Character designs were by Tetsuya Nomura and Roberto Ferrari, with later revisions by Naora. The main characters' clothing was designed by Hiromu Takahara, lead designer for Japanese fashion house Roen. The soundtrack for Final Fantasy XV was composed primarily by Yoko Shimomura, while both real-time and CGI cutscenes were directed by Takeshi Nozue of Visual Works, Square Enix's in-house CGI production studio. Logo illustration was by regular series artist Yoshitaka Amano.

Development began in 2006 as a spin-off title for the PlayStation 3 called Final Fantasy Versus XIII. It was announced as part of the Fabula Nova Crystallis Final Fantasy, a subseries of games linked by a common mythos, and ran in Square Enix's proprietary Crystal Tools engine. Developed by the team behind the Kingdom Hearts series, it was intended to be a darker entry in the Final Fantasy series than allowed in the main series. Nomura was the original director, designer, and created the initial concept and scenario. The project suffered from a prolonged and troubled development, only making fragmentary appearances over the following six years. As early as 2007, the project's scale prompted talks of rebranding it as the next mainline entry. With the internal unveiling of the PlayStation 4 and Xbox One, it was decided to change it into a mainline entry, with a proposed PS3 version being scrapped due to technical troubles. The game's engine also changed, shifting to the company's new proprietary game engine Luminous Studio. At the time of its rebranding and shift to next-generation consoles in 2012, Versus XIII was described as being on 20-25% complete, with Tabata saying it never took shape.

When Tabata took over from Nomura, the entire development team was reshuffled and development started over again, although he worked as a co-director with Nomura until late 2013 to ensure the project remained as true as possible to its original vision. Among the changes were the removal of the original story's opening, and the replacement of original heroine Stella Nox Fleuret with the similarly named Lunafreya. The connection to Fabula Nova Crystallis was also reduced, with branding and mythos-specific terminology removed to aid in the game's marketing. Thematic, aesthetic and design elements were retained due to their core place in the world and backstory. The main concept behind Final Fantasy XV was "a fantasy based on reality", with the world being very similar to Earth and having fantasy elements gradually intruding into an otherwise normal setting. In pursuit of this, locations in Eos were based on real-world locations such as Tokyo, Venice and the Bahamas.

Initially announced in 2006 alongside XIII and Type-0, the game was publicly rebranded at the 2013 Electronic Entertainment Expo, with regular updates on the title beginning the following year. A game demo titled Final Fantasy XV: Episode Duscae was released in March 2015 as a limited addition to Final Fantasy Type-0 HD. Its initial worldwide release, September 30, was announced in March as a big event in Los Angeles titled "Uncovered: Final Fantasy XV". Despite initially being scheduled for September 30, further polishing work resulted in the date being pushed back to November 29. Story and gameplay-based downloadable content, in addition to patches to improve the game's performance were also announced. On November 15, 2017, an online cooperative multiplayer expansion entitled Final Fantasy XV: Comrades, set alongside the events of the base game with player created Kingsglaive soldiers participating in battles against monsters and restoring the power grid around Lestallum. In August 2017, a version for Microsoft Windows was announced, planned for release in early 2018, which will support high-end hardware features such as 4K resolution, Dolby Atmos, Nvidia GameWorks, and a first-person perspective camera option. An episodic Pocket Edition made specifically for Android, iOS, and Windows 10 mobile devices was also announced to be released in 2017.