After the success of Black Caesar (1973), AIP wanted a sequel. Unfortunately, Fred Williamson was filming That Man Bolt (1973) during the week, and director Larry Cohen was busy making It's Alive (1974). They filmed most of this movie on weekends.
Larry Cohen filmed some of the scenes with the same crew and equipment as It's Alive (1974), and due to Fred Williamson's other commitments he had to make most of the film with a stand-in, Williamson himself only really appearing in the close-ups. The close-ups were filmed in LA, where Williamson was based, and the rest of the film was shot on location in New York.
James Brown was originally slated to do the music, but Larry Cohen rejected it. Motown artist Edwin Starr did the music, and Brown released the rejected music in the album, "The Payback".
AIP head Samuel Z. Arkoff insisted that the film not be called "Black Caesar II". This proved to a good call as Black Caesar (1973) was still in theaters when the sequel was released.