The development of The Elder Scrolls IV: Oblivion began in 2002, immediately after its predecessor, The Elder Scrolls III: Morrowind, was published. Rumors of a sequel to Morrowind started circulating in June 2004; the sequel's title was identified on September 10, 2004, the date of its official announcement. Oblivion was developed by Bethesda Game Studios, and the initial Xbox 360 and personal computer (PC) releases were co-published by Bethesda Softworks and Take-Two Interactive's subsidiary, 2K Games. According to interviews with Bethesda staff, the publisher-developer relationship—one of the few independent relations in the industry—worked well, and Bethesda was not subject to excessive corporate guidance. Initially scheduled for a November 22, 2005, release, in tandem with the Xbox 360's launch, Oblivion was delayed to a March 21, 2006, release for Windows PCs and the Xbox 360.
Developers working on Oblivion focused on providing a tighter storyline, with fewer filler quests and more developed characters. The developers sought to make information in the game world more accessible to players, making the game easier to pick up and play. Oblivion features improved AI (which Bethesda calls Radiant AI), improved physics courtesy of the Havok physics engine, and impressive graphics, taking advantage of advanced lighting and shader routines like high-dynamic-range rendering (HDR) and specular mapping. Bethesda developed and implemented procedural content creation tools in the creation of Oblivion's terrain, leading to landscapes that are more complex and realistic than those of past titles, with less of a drain on Bethesda's staff.
A PlayStation 3 version of Oblivion was released on March 20, 2007, in North America, and April 27, 2007, in Europe, following delays similar to those for the Xbox 360 release. The PlayStation 3 release was touted for its improvement over the graphics of the PC and Xbox 360 versions, although some of the improved shader routines optimized for the PlayStation 3 release were set to be ported over to the other releases through patches. A plan to distribute content through downloads paid by micropayment was initially met with criticism by customers due to its alleged low value, but later releases—at a reduced price, and with more content—proved more popular.