The game went through three major versions before it was released. The second version was helmed by Brian Moriarty (who took over from Noah Falstein), and looked a lot like the finished product, but was primarily aimed at adults. Not only was it filled with heavy scientific lingo, philosophical content and creative puzzles, it was also made quite violent and gory, as requested by Steven Spielberg. For example, one of the characters would turn into a bloody corpse after entering a cave with an acid rain, Robbins was to be ferociously attacked by bats, and there was to be an amputation scene featuring lots of blood, requiring a tourniquet. At one point, Spielberg himself suggested a scene where Boston had to electrocute a large aquatic eel in order to obtain the lens from its eye, since it could stun bats; as Boston cut out the lens, blood would splatter all over the screen. However, after receiving much criticism for some particularly violent and bloody scenes in his movie Jurassic Park (1993), Spielberg asked the design team to tone down the mood of the game, so that it would still be appropriate for children. In the end, Moriarty's enthusiasm and ever expanding vision, fueled by Spielberg's involvement, became a bit too ambitious for the technical limitations of the time, so he left the project. Dave Grossman temporarily took over to trim the game's scope while fixing and retaining as much as possible, but he left after several months as well. Sean Clark eventually revived and finished the game.
Steven Spielberg originally intended the storyline to be an episode of his TV series Amazing Stories (1985). It was to be about an archaeological dig on a (presumed) alien planet in the far future. Human archaeologists unearth a large structure and an alien statue, which, in a Planet of the Apes (1968)-like twist, turns out to be the Disneyland castle with the Mickey Mouse statue in front of it, revealing the planet was Earth all along. However, the production costs would have been too high, so Spielberg approached LucasArts in 1989 with the idea of making it a video game instead, after being very satisfied with the way Indiana Jones and the Last Crusade: The Graphic Adventure (1989) had turned out. Spielberg and George Lucas came over to LucasArts and would pitch many other ideas over four brainstorming sessions. The story ultimately went through many changes, retaining only a few elements of the old concept. Spielberg later contributed to the screenplay by suggesting several puzzles and situations, and helping out with character development. He finally sent letters of gratitude to all crew members to thank them for their hard work.
During its production, The Dig was canceled and re-started three times, leading to three different plot outlines and four changes of project leaders. It lingered in development hell for so long that even Sean Clark, who would finally finish it, initially suggested to just cancel the game altogether. It was mostly because of George Lucas' insistence that development on the game, an initiative of his good friend Steven Spielberg, continued and led to a finished product. During the end credits, there is a "Ghosts of Dig's Past" section dedicated to the many artists, including project leaders Noah Falstein, Brian Moriarty and Dave Grossman, who worked on the abandoned versions.
Several pieces of artwork for the game showed four astronauts instead of three, originating from the second version of the game which had four main characters. The fourth character was a Japanese business man called Toshi Olema who co-funded the mission (since NASA was lacking budget) and therefore became part of the crew; his company would also be the manufacturer of the PenUltimate communicators. Olema would have met a gruesome fate when he was to be killed by an acid rain, but his body would later be revived. He was later changed to Dr. Toshi Olema, a brilliant but shy female physicist, but the character was eventually written out of the game completely. All artwork produced thereafter showed three astronauts, even though the footprint of the fourth astronaut can still be seen.
As specified in the game's manual, the name of the alien planet is Cocytus. The planet is never named as such within the game; the characters only ever refer to it as "this place" or "alien planet". Originally, Brink was to come up with the nickname, but this piece of dialogue was scrapped.