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While localizing the game, Sega of America altered it significantly. The most notable changes were that the homosexual stereotype mini-boss Ash was removed, women were given more modest clothing, and the costume colors were changed. Axel is dressed like Adam, Blaze's clothes were changed from red to white, and Skate wears red and blue instead of red and yellow. Sega stated that these were changed to create "gender-neutral colors". The voice-effects were also changed, with Axel's catchphrase of "Grand Upper" for his semi-special move being replaced with "Bare Knuckle".

The plot was rewritten, leaving many gaps in the narrative. In the original the story dealt with a new explosive substance called Rakushin, discovered by a Dr. Gilbert, and the disappearance of a military general. In the localized version all references to Rakushin were removed, the general was replaced by the chief of police, and a scheme to switch city officials with robot clones was invented. Another difference was if you didn't save the general, you had to head to the White House. This was changed to City Hall, although the building depicted was still clearly the White House.

Bare Knuckle 3, even on the highest difficulty setting, was significantly easier than Streets of Rage 3 on its default difficulty.

A comprehensive list of all the changes between the versions, as well as a complete translation of the Japanese script, can be found at SOR online.

The European box art, featuring Zan and Blaze in front of the New York skyline, was originally drawn by the magazine Mean Machines Sega, used as the front cover for the edition that featured a review of the game. Sega bought the rights to the image.