The game, developed by Sega AM2 and built on their Model 2 arcade system, pits players in one-on-one battles with a roster of characters from the Sonic the Hedgehog series.

A home console port for the Sega Saturn was announced, but ultimately canceled, resulting in the game staying an arcade exclusive until 2005 with the compilation Sonic Gems Collection for GameCube and PlayStation 2.

They are holding a fighting tournament to determine who will take the emeralds in order to power a spaceship and stop series antagonists Doctor Robotnik and Metal Sonic from building an evil fortress in space.

[2][3] The 2012 re-release added Metal Sonic, Doctor Robotnik, and Honey the Cat as playable characters, all previously only accessible through hacking into the original arcade version.

Players can spend a barrier to temporarily enter "Hyper Mode" which allows them to perform several attacks in quick succession.

[5] At first Naka was concerned that Sonic would be unable to fight considering his large head and short arms, but he was delighted after seeing the smooth animation accomplished by Suzuki's team.

[5] Suzuki focused his team on modeling the characters' faces correctly so they were instantly recognizable on arcade floors.

[10] The development team added in the barrier mechanism because the characters' arms were too small for traditional blocking to look distinct.

They also added rings that drop when a player is hit to make it easier for beginners to judge how much damage they were taking instead of referring to the health bar.

AM2 explored whether dropped rings could be picked up to restore health or the barrier's power,[8] but ultimately did not include this feature.

[2] In later years, hackers found Honey from Fighting Vipers was hidden in Sonic the Fighters as a playable character, and modeled as an anthropomorphic cat.

[20][21] This version added Metal Sonic, Doctor Robotnik, and Honey the Cat as playable characters and featured new online versus modes.

[25] In 1997, Computer and Video Games reported a rumor that Sonic the Fighters would release for the Saturn in Japan mid-year and North America a couple months later.

[29] After seeing it demoed at a Japanese arcade expo, GamePro shared their admiration of the game's cartoon-like animation, comparing it to Looney Tunes.

They believed the backgrounds and character animations were detailed well, but felt that hardcore fighting game fans would be disappointed with the lack of gameplay depth.

[35] Official Xbox Magazine called it an interesting and obscure release, and a fascinating part of Sega's history, but concluded that it loses traction because of its lack of seriousness as a fighting game.