Halo 3 was initially conceived before Halo 2 was released in 2004. Much of the staff were preoccupied in making extra content for Halo 2, while others continued with the groundwork for the development of Halo 3. Bungie remained quiet as to what their new project was, leaving comments in their weekly update alluding to a "new project". The game was officially announced with a real-time cinematic trailer at E3 2006.

Bungie kept the public informed on game development via weekly updates on their web site. During development, the game was divided into single player and multiplayer builds; this made debugging and testing the much smaller multiplayer files quicker. While details of Halo 3's multiplayer were widely disseminated in the sixteen months leading up to the release, the single-player aspect of the storyline was kept relatively secret throughout much of the development to build up interest. The first campaign screenshots did not appear until a year after the announcement trailer, on July 5, 2007, as a "tease" for the planned pace of marketing.

A public beta test of the game's online multiplayer features, as well as saved films and file share, took place four months before the full release. Players required a Crackdowndisc to play the beta.

AI behavior was enhanced and improved; the behavior of enemy Brutes the player faces was modified, giving them a "pack mentality" that causes the aliens to perform similar actions at the same time and altering gameplay.