Yacht Club Games developed Specter of Torment after finishing production of the previous DLC, Shovel Knight: Plague of Shadows.

[3] Hidden inside levels are red skulls, which can be traded at a vendor in the hub world for special weapons and abilities called Curios.

[4][5] Curios serve a similar role to Relics in Shovel Knight,[3] and are powered using a resource called darkness that is recharged by slaying enemies.

[2] Examples of Curios include the "Green Skull" for regaining health,[5] "Judgment Rush" for teleporting through walls,[2] and "Hover Plume" for temporarily floating in mid-air.

As Specter Knight defeats his adversaries and forces them to serve the Enchantress, he recalls memories of his former life: before dying, he was an adventurer named Donovan, who explored alongside his partner, Luan.

Shield Knight, having transformed into the Enchantress due to the amulet's corruption, offered to save a mortally wounded Donovan in exchange for servitude.

[8] Development of Specter of Torment began after Yacht Club Games finished production of the previous DLC, Shovel Knight: Plague of Shadows.

The developers hoped to make a more ambitious expansion than Plague of Shadows, which featured a character with unique movement, but the same levels as the original game.

[10] The wall jumping was inspired by 3D action games such as Prince of Persia, while the slashing movement was influenced by The Legend of Zelda: Ocarina of Time and Ninja Gaiden Black.

The developers wanted Specter Knight to act like a "grim reaper ninja",[10] at one point included shurikens as part of his attack repertoire.

Believing that this system made Curios feel like power-ups rather than new abilities, the developers allowed them to be permanently accessible through an inventory similar to the original Shovel Knight's.

Some of Specter Knight's boss abilities were recreated as Curios, and others were designed to address specific level challenges such as invulnerable enemies or difficult platforming.

[9] The rooms and enemies were often revised or rearranged, and the team would sometimes consider their plans excessive, abandoning them to focus on creating basic platforming sections.

Yacht Club Games felt that the gameplay concepts should be "introduced, extrapolated upon, shuffled away, and revisited",[11] and that players could be challenged if all the mechanics were combined at the end of the level.

[12] Because players could use the hub to access all of the available stages, unlike the previous two games where they could only be completed in a certain order, the team redesigned the easier levels of Shovel Knight and Plague of Shadows to be more difficult, while reducing the challenge of the harder ones.

The developers considered Plague of Shadows and Shovel Knight too similar visually, saying that the comparable graphics made it hard to communicate that they were separate games.

[15] Critics called Specter of Torment a worthy entry in the Shovel Knight series,[2][19] and felt that it built upon the merits of the original game.

[3][19] GameSpot said that Specter of Torment replicated the mechanics that made Shovel Knight excellent,[3] while USgamer felt that it was of similar quality to both of its predecessors.

"[19] GameSpot considered the platforming challenging, highlighting how Specter Knight would have to input several moves together to progress and contended that the difficulty helped make gameplay feel rewarding.

GameRevolution and Nintendo Life found the levels similar to that of the original game, but liked the content additions and how the stages accommodated Specter Knight's movement.

[4][5][20] Nintendo World Report liked the narrative and called it "surprisingly tragic",[5] while Shacknews felt that the story helped make Specter Knight a complex character.