The game supported Xbox Live for online multiplayer gaming, and featured a split-screen mode for offline multiplayer. Extra downloadable content was available via Xbox Live to expand the game's original premise. Capture the Gold is a mode where gold is stashed around the city and the player must take it to a hideout. Other players will attempt to steal the gold. Checkpoint has players race against others on predefined tracks around the city. Cruise is a free-roam mode around the city with others. In Hunter, one player starts off as the Hunter and everyone else in the game is Prey. As the Hunter captures Prey, they in turn become Hunters, and the last person who is Prey stands alone as the winner. Stayaway is a mode where whoever holds the rabbit for the longest time wins. Tag is a mode where players chase each other and try to bump each other's cars.
Midtown Madness 3 was announced as being in development in April 2002 as an Xbox-exclusive title, with a tentative release date of late 2002. The game was developed by Digital Illusions CE, who had previously developed Rallisport Challenge for the Xbox. An early development build was showcased to the public for the first time in May the same year. Some of the game's vehicles were licensed from manufacturers, including Ford Motor Company, Lotus, Audi and Hummer. Several landmarks from both Paris and Washington, D.C. were included. The Paris open world stage features the Eiffel Tower, Arc de Triomphe and the Louvre, while Washington, D.C. features Capitol Hill, the White House and Dupont Circle. To promote the game Microsoft released a satirical documentary on the motion capture of various pedestrians in the game. The game was released in June 2003. It was packaged later that year in an Xbox console bundle with Halo: Combat Evolved in Europe. Multiple downloadable content packages were made available after the game's release. Four car packs and two track packs were released free to players.
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