The overall style was influenced by culture from the 1950s and 1960s, and the later music videos of Peter Gabriel and Michael Jackson, the latter having a cameo appearance in the game.

While the game was released to low sales, journalists gave the Dreamcast original generally positive reviews; praise focused on its music-central gameplay and art style, but faulted its short length and syncing issues with the graphics.

[4] Players control Ulala through four stages;[5] real-time polygonal character models and visual effects move in sync to pre-rendered MPEG movies which form the level backgrounds.

[16] This concept originated in 1993, with full production beginning in 1998 following extensive internal planning and approval by Sega senior staff.

[5] Mizuguchi acted as the game's producer, with Takashi Yuda both directing and providing the voice for supporting character Fuze.

[17] The earliest versions of the game were described by Mizuguchi as "very cool, but not so fun", as players simply pressed buttons in time to the music while a non-interactive video changed.

[5] When pitching the gameplay in his design document, Mizuguchi distilled the basic cycle of effort and reward, then came up with a means of realising them in the game.

[22] An early tech demo was put together for the game; in this prototype version, the player character was a man, and only the most basic elements of its gameplay and theme were in place.

[26] Influences on the characters and art design came from across the production team, with tastes ranging from Star Wars to Doraemon to Monty Python.

[20][38] Mizuguchi initially wanted to refuse the request, as the game was only a month away from completion, but the team wanted to include Jackson, so they substituted a Morolian-controlled NPC character for a model based on Jackson and added moves based on the singer's famous dance moves.

[40][44][45] Following their exit from the console market, Sega began moving the Space Channel 5 franchise onto other systems, beginning with the PlayStation 2.

[58] GamePro positively compared the gameplay and style to PaRappa the Rapper and Dragon's Lair, recommending it as a short and enjoyable experience while noting a lack of extras.

[63] GameSpot's Jeff Gerstmann said Space Channel 5 was worth playing for its unconventional art style and music, with his main complaints being repetitive gameplay and lack of unlockables.

[68] IGN gave both the Japanese original and the Western release near-perfect scores, praising the presentation while criticizing the short length and timing issues.

"[80] Entertainment Weekly said that "gamers of all ages undoubtedly will want to help Ulala get her groove back — if not get their hands on a pair of those boots.

[89] Space Channel 5 and Sega AM9 were nominated at the 2002 BAFTA Awards in the "Best Audio" category, losing to Luigi's Mansion.

[7] GameSpy's Christian Nutt lauded the music and its lead character, in addition to the low price for the double game pack, but faulted its length and issues with the localization.

[75] Paul Fitzpatrick of Official U.S. PlayStation Magazine felt that the original game's flaws were only exacerbated when contrasted with its sequel.

[78] Paul Fitzpatrick of PlayStation Official Magazine – UK enjoyed the soundtrack and lauded its sense of style, but criticized its length.

[3] By contrast, the Game Boy Advance port received a Metacritic score of 55 out of 100 based on 15 reviews, indicating "mixed or average" reception.

[85] GamePro was surprised that the game worked on the portable console, praising the efforts of the team while being unable to recommend it to buyers.

[10] The Village Voice gave the port a good score, saying that the game's core remained intact and enjoyable despite low graphical quality and control issues.

[77] A sequel to Space Channel 5 was planned from an early stage, but production was put on hold until Western sales figures came in.

[99][100][101] While concepts existed for a third game in the series and pitches were made for the Wii and Kinect, the team felt they had exhausted their ideas, and Sega showed little interest in a new entry.

[29][102][103] Beginning in 2016 as an experimental collaboration with Sega and KDDI titled Space Channel 5 VR: Ukiuki Viewing Show, the project saw a strong fan response for a full game.

[103][105] Originally scheduled for release on PlayStation VR, SteamVR, HTC Vive and Oculus Quest during December 2019,[106][107] the game was delayed into the following year to improve its quality.

A collaboration between Sega and Erik Feig's Picturestart company, the script is being co-written by Barry Battles and Nir Paniry.

[115][116] Sega's Sonic Team studio also created a mobile application called Ulala's Channel J[c] for Japanese Vodafone devices in July 2001.

[127][128] In 2003, Space Channel 5 and its protagonist Ulala were the subject of a lawsuit against Sega from Deee-Lite vocalist Kierin Magenta Kirby.

[130][131] "Groove Is in the Heart" was later licensed for use in Sega's 2008 Wii port of Samba de Amigo, used in a section of the game where the Ulala character appears.