Using what they learned from the project, and taking significant inspiration from Diablo, Sonic Team built Phantasy Star Online.

[8] To create their character, they choose between a handful of races and classes, which define their abilities and statistics; for example, some types are better with "techniques" (magic spells) while others are more skilled with ranged or melee weapons.

[10] The four environments – forests, caves, mines, or ruins[10] – comprise winding passages and large areas where enemies spawn.

They discover the planet overrun by monsters, and follow messages left by Rico leading to an ancient evil, Dark Falz.

None of Sega's development studios wanted the project, as they were occupied with their own ventures, such as Jet Set Radio (2000) and the Sakura Wars series.

[16] Much of their time was spent learning the basic elements of online gaming; they wanted to make sure the network functionality worked before developing the gameplay, setting, and story.

[16] Diablo in particular impressed him on a gameplay and technical level; he enjoyed how smooth the graphics and action were despite requiring significant system memory.

[18][24] Since few of the Phantasy Star IV staff still worked at Sega, the art team felt little obligation to adhere to the previous games' style, retaining only the science fiction look and some enemy and item names.

Naka and Sakai believed factors such as the change in graphical fidelity and genre were enough to differentiate it from previous Phantasy Star games.

[16] The soundtrack was composed by Hideaki Kobayashi using a Roland JV-2080 synthesizer, with live orchestration on some tracks, including the theme song.

[23] In Japan, Sonic Team gave beta versions to 10,000 users who pre-ordered the game, so they could work with a variety of equipment and internet services to eliminate problems.

[27] Despite technical success, Sega was concerned that the high cost of internet access in Japan would be prohibitive for gamers and reduce sales.

[24] Japanese internet service providers charged per-minute fees for dial-up access, and high-speed options such as broadband were not yet widely available.

[18] Sonic Team felt that developing a universal language system would be the largest barrier to a global gaming network.

[11] Japanese and English were easier to implement because the only concern is the word location in the sentence, whereas Spanish and French have grammatical gender.

[23] A player-versus-player mode was included in beta versions given to journalists, but this was omitted in the final version because it distracted players from the cooperative focus and introduced game balance issues;[23] additionally, as the console-playing audience was younger than the PC audience, Naka did not want to evoke competitive behavior.

[11][13] Francesca Reyes of Official Dreamcast Magazine proposed that it would be an "industry-changing title", a landmark in the history of console gaming.

[45] Immediately after the Japanese release, Sonic Team began maintaining the overworked servers and investigated network problems in Hiroshima and Okayama.

[23] In Japan, a special "Fan Cup" quest was held from March 23 to April 6, developed with the game magazine Famitsu.

In the event, over 70,000 players[52] competed for the fastest time; the winner received a cash prize and a rare game item.

2, an updated version of the original game with new content and improved features,[58][59][60] including an increased level cap (to 200),[61] a new difficulty mode for players over level 80,[58] a battle mode that pits players in one-on-one or team battles, a soccer minigame with balls shaped like characters from ChuChu Rocket!,[58] new weapons and monsters, gameplay balance alterations, day and night effects, an improved user interface, and two new areas exclusive to online quests.

2 also adds a challenge mode, which places teams in a stage with starting equipment and stats; if a teammate dies, the mission ends.

[72] To make the game more viable for Nintendo's family-oriented consumers, Sonic Team added a split-screen multiplayer mode.

[97] A new version for Windows, Phantasy Star Online Blue Burst, was released in Japan on July 15, 2004, following an open beta that began on May 22.

[116] Dreamcast Magazine (Japan) wrote that the cooperative play was an interesting shift from a trend in multiplayer games being mostly competitive.

[120] Spanish magazine Dream Planet and GameSpot praised how the players can take on different roles in the teams, such as a supporting healer or ranged attacker.

[126] GameSpot and IGN agreed, saying that the core gameplay remained the same, but the new features may be worthwhile for dedicated players, even with the new subscription costs.

[127][128] Reviewing Episode I & II, critics praised the split-screen mode, Game Boy Advance downloads, graphics improvements, and gameplay tweaks.

[129][130][131] GameSpot wrote that the new material in Episode II was not significant enough for veteran players to return, and criticized some practical issues with how split-screen multiplayer was handled.

Sega has been slow to localize Phantasy Star games, and the PSP entries in the series did not capture the attention of the west.