Ms. Pac-Man was originally conceived as a bootlegged hack of Pac-Man called Crazy Otto, created by programmers employed at the General Computer Corporation (GCC).[2]
The programmers, surprised at the quality of the game they had created, showed it to Midway, Namco's American distributor of the original game. Midway had become impatient in waiting for Namco to release its next Pac-Man game (which would be Super Pac-Man), and were enthusiastic that such a game had come to their attention. They bought the rights to Crazy Otto, changed the sprites to fit the Pac-Man universe, renamed the game Ms. Pac-Man, and released it into arcades.

After the game became wildly popular, Midway and GCC undertook a brief legal battle concerning royalties, but because the game was accomplished without Namco's consent, both companies eventually turned over the rights of Ms. Pac-Man to Namco, fearing a lawsuit. Nonetheless, Ms. Pac-Man was the first of a series of unauthorized sequels that eventually led to the termination of the licensing agreement between Namco and Midway.[2] Ms. Pac-Man was later released on the third Namco Museum game; however, there is no mention of it in Namco's official archives (including the archives on all of the Namco Museum releases).

In 2001, Namco released an arcade board featuring both Ms. Pac-Man and Galaga in honor of the 20th anniversary of both games. It also features Pac-Man as a hidden bonus game. The later 25th Anniversary Edition allows all three games to be selected at the main menu.