According to Carlsen, the game started development shortly after he left Playdead in 2016, and was centered around how "spatial relationships between interconnected realms could be used in puzzles".

Composer Jakob Schmid and art director Erwin Kho joined Carlsen to form Geometric Interactive.

[3] The game was initially conceived as a sidescroller, but they found that it lessened the impact of traveling between worlds and switched the perspective to top-down.

[2] Eurogamer's Christian Donlan enjoyed the art direction of Cocoon, feeling that it captured the alien nature of the setting, "you're exploring worlds that are both gloopy and organic, filled with heavily vesseled tumours and sacs and twitching mandibles".

[16] Ed Thron's Rock Paper Shotgun praised the game for not being overly obtuse, writing that "solutions are often intuitive twists on a blueprint", rather than "brain-busting world swappery".