Eurogamer posted an excellent interview with Game Freak director Junichi Masuda, who has been working on the Pokemon series since the very beginning. Masuda covers many topics, including how new Pokemon are created. Here’s an excerpt:
At first I think of ideas about what kind of play I can include. I consider playing content at first, and then what kinds of new elements I can bring in, and the world and communication aspects.
I bring up all the ideas at first. Then I start to think about what the world will be like. Which region? What town should we have? What type of gym should we have? I start to map the world next.
Once those are fixed I can start to think, so, this gym should have this type of trainer, so we should have this type of Pokemon. Then we start to think about the Pokemon characters.
You might think we always start to think from the Pokemon first, but actually we don’t. We do it in this order.
Now you know how new Pokemon are “born”! Seriously though, Masuda is a very cool guy and I highly recommend checking out this interview.