Cyberpunk 2077 entered pre-production when developer CD Projekt Red had finished The Witcher 3: Wild Hunt – Blood and Wine (2016), with approximately fifty staff members involved. They later devoted a team larger than that of The Witcher 3: Wild Hunt (2015), and after it was released, began upgrading their REDengine 3 to complement Cyberpunk 2077. CD Projekt Red was granted subventions of US$7 million by the Polish government, whose funding application confirmed they were using REDengine 4. In June 2017, preliminary designs were stolen and threatened to be released to the public, but the developer refused to comply. The development reportedly reached a milestone in late 2017, and in March 2018, a new studio opened in Wrocław to aid the production. That October, CD Projekt Red established a partnership with Canadian studio Digital Scapes to craft additional tools for Cyberpunk 2077. The developer partnered with Nvidia in June 2019 to achieve ray tracing in real time, and QLOC in January 2020 for quality assurance.
Early on, stream processing and global illumination were made to function without overwhelming the central processing unit. Originally to launch with multiplayer, this was first assigned to research and development, and later declared as a post-release feature. The first-person perspective was chosen to immerse players more than what third-person would allow. Cutscenes and gameplay were both made in first-person to seamlessly blend together. Cyberpunk 2077 features full nudity, which game director Adam Badowski said encapsulates the theme of transhumanism—"the body is no longer sacrum [sacred]; it's profanum [profane]". The script was written in Polish and then a separate team translated the dialogue into English. The quest designers, who oversaw the making of their own ideas, enabled players to decide the order in which quests are undertaken. Side quests were often made from unused parts of the main story. CD Projekt Red invented a technology based on sound analysis from neural networks, producing real-time lip sync for all localisations. Animation systems were remade to better generate muscle movement, motion capture was improved, and environments were created from prefabricated designs. Reused models had their colours and details altered. Some things were procedurally generated. Feedback from E3 2018 influenced the developers to allow a non-lethal playthrough and disallow the male-female option in character customisation, instead basing it on voice and body type. Night City was designed with the help of urban planners. The world is loaded using vertical streaming to render only the assets that appear on screen. By August 2018, the story was fully realised and could facilitate a complete playthrough. The content was nearly complete in mid-2019, with the rest of development focused largely on polishing. Staff started working from home in March 2020 due to the COVID-19 pandemic, causing a halt in localisation.
Cyberpunk 2077 was based on Mike Pondsmith's Cyberpunk franchise. Pondsmith started consulting on the project in 2012. He also appears in it as a character. His follow-up to Cyberpunk 2020, Cyberpunk Red, made an impact on the lore. Cyberpunk 2077 drew its influences from the 1982 film Blade Runner, manga and anime series Ghost in the Shell, and video games System Shock (1994) and Deus Ex (2000). It features a motorbike from the Akira manga and anime film and a car inspired by Mad Max: Fury Road (2015). The Witcher 3: Wild Hunt composer Marcin Przybyłowicz wrote the score, along with P. T. Adamczyk and Paul Leonard-Morgan. Songs for in-game radio stations were specially made; Refused created music for the group Samurai and Grimes voices the frontwoman of Lizzy Wizzy and the Metadwarves. Run the Jewels, A$AP Rocky, Gazelle Twin, Ilan Rubin, Richard Devine, Nina Kraviz, Deadly Hunta, Rat Boy, and Tina Guo also contributed. In July 2018, actor Keanu Reeves was approached for the role of Johnny Silverhand, codenamed Mr Fusion to maintain secrecy. He would lend his likeness to, voice, and do motion capture for the character. Reeves' dialogue amount is second only to that of V. Having first spent fifteen days recording his lines, Reeves was later granted his request that Silverhand's screen presence be doubled. Sebastian Stępień served as head writer and creative director before leaving for Blizzard Entertainment in early 2019.