Katana Zero features side-scrolling hack-and-slash gameplay in which the player attempts to kill all enemies in a level without being hit, using Zero's abilities to manipulate time, dodge attacks, and take advantage of environmental hazards.

Using GameMaker Studio 2, Stander sought to make a difficult story-driven game that did not force the player to wait through dialogue and cutscenes.

The development was prolonged and Stander worked mostly alone, although he recruited artists to design the visuals as well as musicians Bill Kiley and Thijs "LudoWic" Lodewijk to compose the synthwave soundtrack.

[1] Certain levels feature unique game mechanics, such as a stealth mission in a nightclub,[8] a motorcycle chase,[9] and an alternate player character.

[7] Katana Zero has been frequently compared to Hotline Miami (2012),[8][10] as both feature levels filled with enemies, one-hit kills, and require players to determine their chosen route strategically.

[15] In between levels, the player converses with non-player characters (NPCs), such as the psychiatrist, the girl, and a Russian psychopath antagonist named V, who admires Zero's lethality.

[4][31] Stander decided to develop a Nintendo Switch version immediately after the system was unveiled because he saw it as a good console for indie games.

[32] Stander looked to indie games that feature "tight, fast-paced, instant death combat" for inspiration,[34] such as Trilby: The Art of Theft (2009) and Gunpoint (2013).

[10][26] Stander focused on attention to detail and said adding a single mechanic, such as a gun turret, would require him to alter many different systems, such as the lighting, to maintain cohesion.

[26] Stander said telling a story was a large part of his motivation to develop Katana Zero, wanting to celebrate his favorite tropes and provide his own spin on them.

[10] The script is credited to Stander and Eric Shumaker, with additional writing by Sterling Nathaniel Brown and Ian Goldsmith Rooney.

Elements Stander conceived early on included a protagonist who was "sort of trapped in their situation, because those always make for good main characters in action games," and a disagreeable psychiatrist whom players would dislike.

[30][34] The story structure was inspired by Hotline Miami, in which the player character is directed to kill by mysterious phone calls, and its themes include drug addiction and mental health.

[26] Stander allowed the player to interrupt any line of spoken dialogue because many of the action games he grew up playing "would grind to a halt as the protagonist and the second banana argued about politics, or when the villain deigned to deliver a winding monologue.

[16] The dialogue tree system originated from Stander's concept for a role-playing video game (RPG) that centered on limitlessness, allowing the player to interact with any object and fight any NPC.

He noted "even the ones that seem big will peter out or resolve themselves," similar to Telltale Games' The Walking Dead series, such as an instance in which a decision will cause the player to temporarily lose their sword.

For example, Zero's relationship with the psychiatrist suffers if the player ignores his orders, which can lead to alternate story paths in which Zero learns information he was not supposed to.

"[36] Kiley and Lodewijk attempted to reflect Zero's changing psyche and moods in their music, such as when Zero experiences Chronos withdrawal and snorts cocaine in a limousine.

[36] Kiley drew influence from the work of Gary Numan, Yellow Magic Orchestra, and Vangelis,[36] and sought to evoke the feelings of 1980s action films.

[40] Stander sent Kiley and Lodewijk screenshots, concept art, and notes describing the atmosphere he was aiming for, occasionally alongside an existing piece of music for reference.

[47][48] Stander announced he had "amicably parted ways" with Adult Swim in December 2018,[48] and revealed Devolver Digital had acquired the publication rights the following month.

[51][52] The Switch version was temporarily banned in Australia after it was refused classification by the International Age Rating Coalition,[53] due to its depiction of graphic violence and drug use.

They enjoyed the retro VHS aesthetic and visual effects[6][9][62][23]—though some wrote their intensity could induce headaches[1][62]—as well as the amount of detail in the sprites and animations.

[5] GameSpot appreciated that Katana Zero did not use a retro aesthetic simply for nostalgia,[2] and alongside Polygon found the detailed sprite work and smooth animations added emotional weight.

He felt the soundtrack had a clear focus but remained "willing to experiment with obscure genres" and complimented the composers for doing something original in contrast to the "cliché" chiptune style prevalent in indie games.

[9] Shacknews praised the plot twists,[1] and GameSpot said the story did a good job balancing graphic violence with "delicately quiet character moments and some heartfelt relationships".

[2][4][63] However, PC Gamer found the plot generic dystopian fiction with stock characters,[7] while Game Informer felt it had interesting ideas but "most of them just cryptically meander without reaching any crescendo".

[63] Minor criticism came from IGN, which said many story deviations felt superficial, leading to later choices feeling inconsistent with those made earlier.

[7] GameSpot,[2] USgamer,[23] Destructoid,[9] and IGN felt the gameplay stayed interesting with its set pieces and variety of enemy types,[5] though Game Informer disagreed.

[79] The ports received positive reviews from Pocket Gamer and TouchArcade, who felt the game remained high quality on mobile platforms.