When 20th Century Fox asked Predator screenwriters Jim and John Thomas for a sequel, they pitched six ideas, and the studio chose the concept of putting the creature in an urban jungle setting rather than the jungle of the original.

The screenplay for Predator 2 was developed in just three weeks, with a goal of expanding on the Predator's origins, showing it had been visiting Earth for centuries and was not psychopathic but simply interested in hunting.

Director Stephen Hopkins originally envisioned Patrick Swayze as the lead alongside a returning Arnold Schwarzenegger, but Schwarzenegger declined to reprise his role due to a salary dispute.

Hopkins also met with Steven Seagal, who wanted to play the lead as a CIA psychiatrist and martial arts expert, but Hopkins rejected the idea because he wanted the character to be an average Joe type.

Producer Joel Silver cast three actors he had worked with on Lethal Weapon—Gary Busey, Steve Kahan, and Danny Glover—with Glover taking the lead role of Harrigan.

Stan Winston redesigned the Predator to look more urban and hip than in the first film, giving it steeper tribal head ornamentation, brighter skin coloration, and more fangs to suggest a different individual of the same species.

Since the Alien franchise is also owned by Fox and shares effects work by Stan Winston, the crew placed a Xenomorph skull among the trophy heads displayed inside the Predator's ship as an easter egg.

The film is set in 1997, ten years after the original, which led to since-outdated futuristic guesses like a nonexistent Los Angeles subway system—the real Los Angeles Metro Rail only began operating the same year the film was released.

The MPAA initially gave Predator 2 an NC-17 rating, forcing several cuts to secure an R rating for release.

Toward the end of filming, a short unofficial music video was shot featuring Danny Glover dancing with the Predator and other cast members.