Sega Rally 2 is an arcade racing game developed by Sega for the Model 3 arcade hardware. It is the sequel to 1994's Sega Rally Championship. The game was first released in arcades in February 1998, and was later ported to the Sega Dreamcast, becoming one of the console's earliest titles when it was released in Japan on January 28, 1999. The Sega Dreamcast version was released in Europe as a launch title on October 14, 1999, and then in North America on November 27. A PC version was released in Japan and Europe that same year, with the North American release following suit in September 2000, where it was published by Mattel Interactive.

Tetsuya Mizuguchi is a Japanese video game designer, producer, and businessman. Along with ex-Sega developers he is one of the co-founders of the video game development firm Q Entertainment. He formerly worked for Sega as a producer in their Sega AM3 'arcade machines' team, developing games like Sega Rally Championship and Sega Touring Car Championship, before moving on to become the head of Sega's United Game Artists division, the team responsible for Rez and Space Channel 5. Mizuguchi is better known for creating video games that incorporate interactive synesthesia into his game design, regardless of genre, evidenced by Rez, Lumines, Child of Eden, and Tetris Effect.