In September 2005, it was officially announced that Episode III would mark the premature end to the series, which was originally planned to span six titles. The cast from Episode I and II will return; minor protagonists Allen Ridgeley, Canaan and Miyuki Itsumi are playable characters for the first time in the series, albeit only briefly. The keyword database, is still present just like Episode I and Episode II, it also has enhanced features like images and the ability to view in-game models of characters, enemies and mecha. The database has a new feature called "Memory Code" in which any cut scene can be viewed, provided it has already occurred during gameplay in an existing save file. Episode III takes place one year after Episode II, with E.S. units from Episode II and the Zohar Emulators and "techs" from Episode I making a return.
At the start of Episode III's development, Yuki Kajiura (Xenosaga Episode II, .hack//Sign, Noir, and Madlax) became the sole composer in Xenosaga III. A handful of remixes, arrangements and reappearances of tracks from the "Xenosaga Episode II: Movie Scene Soundtrack" appear in the game. The game soundtrack, "Xenosaga Episode III: Original Sound Best Tracks (Yuki Kajiura selection)" was announced for a 2CD release on July 12. It consists of 40 tracks selected by Yuki Kajiura from the game (though it is not a complete release of all the tracks). The ending theme of the game is called "Maybe Tomorrow", sung by Emily Curtis. The soundtrack also contains vocals by Eri Itoh. The soundtrack follows the style of Kajiura's Episode II soundtrack with several key themes from Episode II, chief among them KOS-MOS' theme, appearing throughout the game.