With the game the team wanted to explore the "wild extremes" of childhood. The game's setting, the Maw, was created as a piece of concept art "where all the worst things in the world could be left to rot".[6] In keeping with the theme of childhood, the team opted against creating a powerful protagonist. While the gameplay has been described as stealth based, the team prefers to describe it as "hide and seek" feeling that even the term "stealth" gives the impression of an empowered character.[7]

The game was originally announced by Tarsier Studios in May 2014 under the title Hunger, with no known publisher for release on PlayStation 4. After a teaser trailer in February 2015, nothing was heard of the project until August 2016, when Bandai Namco Entertainment announced that they had entered into a worldwide publishing agreement with Tarsier for the project, which was now re-titled Little Nightmares.[8] The team opted to change the name to differentiate it from The Hunger Games series thus making it easier to search for.[7]