Unlike the two preceding TV specials, this film was directed by Masami Ōbari, who also served as character designer and chief animation director, and it moves away from the arcade game canon to tell a completely original story.

On April 10, 1994, an event called 'Gather, Fatal Fury fans from across the country!' was held at the Shochiku Central I theater in Ginza, Tokyo, featuring a trailer screening, a talk session with the voice cast and Ōbari, and a fighting game tournament involving the cast members.

Geese Howard, who was believed to have died after his defeat by Terry in the first special, is shown to have survived and is training, hinting at a sequel.

Director Masami Ōbari revealed on Twitter in 2022 that a third Fatal Fury TV special was already greenlit during this film's production, prompting the crew to hastily add Geese's appearance as a sequel hook, but the project ultimately fell through for various reasons, making this film the de facto final entry in the series.

As in the previous two specials, Terry Bogard's basic attacks are based on traditional karate kata rather than the mixed martial arts style seen in the original games; for example, in the opening Neo Geo Land scene he dispatches Laocorn's henchman with a reverse back-fist strike to the neck drawn from karate stances.

The Japanese ending theme 'Yoake no Legend' ('Dawn of a Legend') was performed by Kazukiyo Nishikiori, the voice actor of Terry Bogard; for the North American release it was retitled 'Oh Angel' and re-recorded with English lyrics by Canadian singer Warren Stanyer.

Reiko Chiba, who portrayed Nakoruru in SNK's Samurai Shodown ad campaign and was known for playing Mei in Kyōryū Sentai Zyuranger, makes two cameo speaking appearances in the original Japanese version, once congratulating Joe after his fight and once appearing dressed as Nakoruru in Duck King's nightclub, swapping places with Mai.

The Japanese domestic DVD release by Marvelous Entertainment included modifications to certain scenes as a measure against photosensitive epilepsy seizures, while the 2014 North American DVD from Discotek Media preserved the original unedited theatrical version with a new squeeze-format master instead of the letterboxed Japanese version; a 2017 North American Blu-ray release marked the first HD master release of the film on home video.

The film received praise in the 1990s, including a perfect 10/10 score from Max Autohead of Hyper magazine, who called it the best animated martial arts movie he had seen, and a B+ rating from GameFan magazine's Shidoshi, who considered it the best game-based anime up to that time.