The game originated in creative director Alex Ward's experience with open world titles such as Crackdown, Test Drive Unlimited, and Mercenaries: Playground of Destruction. Ward found that the world itself in open-world games provided entertainment beyond what developers planned, and he wanted to apply that sense of freedom to a racing game. The result was a racing game without defined tracks, a structurally novel approach at the time that Ward later noted influenced several other racing game developers. He also intended the game to function as a social platform, which shaped decisions around multiplayer formats.
Convincing Electronic Arts to support the vision proved difficult. The Burnout series was already regarded internally as less lucrative than Need for Speed, and EA was initially resistant to the open-world proposal. The game nonetheless sold more than one million copies within its first three months of release, validating Ward's approach.
Events in Burnout Paradise are started by pulling up to any traffic light and simultaneously pressing the accelerator and brake. During a race, players can take any available route through Paradise City to reach the finish line rather than following a fixed path. The game tracks performance statistics — including fastest times and biggest crashes — for every street in the city on the player's driver's license. Completing events raises the driver rank, unlocking new vehicles.
The Burnout series' signature Crash Mode was reimagined as "Showtime", a mode that can be triggered at any time anywhere on the map, in which the player bounces their wrecked car through traffic to accumulate points. The damage model was reworked so that crashes with minor consequences allow a "driveaway" — the player continues without interruption — while more severe impacts result in a "wrecked" state requiring a reset. Cars carry loosely real-world-inspired manufacturer and model names and can be customised only in colour, changed by driving through a paint shop forecourt. Driving through a gas station refills the boost meter; a repair shop restores the car's condition.
Online multiplayer replaced the traditional lobby system with "Easy Drive", accessible mid-game via a D-pad shortcut. A Mugshots camera feature captured player photos at moment of impact, which were then displayed to the opponent.
Burnout Paradise received substantial free post-launch content delivered through named software updates. The "Bogart" update addressed glitches. The "Cagney" update added three multiplayer modes — Online Stunt Run, Marked Man, and Road Rage — along with 70 new timed online challenges and 1080i support on PlayStation 3. The "Davis" Bikes Pack introduced motorcycles and a dynamic day-night cycle, 70 bike-only challenges, and Midnight Rides events. A later update added an in-game browser and store, and also adjusted vehicle handling to reduce difficulty for newer players.
Premium downloadable content included the "Legendary Cars" pack, featuring vehicles based on the DeLorean time machine from Back to the Future, the Ecto-1 from Ghostbusters, KITT from Knight Rider, and the General Lee from The Dukes of Hazzard. The "Big Surf Island" expansion added a new driveable island environment with new events, vehicles, and challenges, designed around stunt-focused gameplay informed by telemetry showing where players naturally congregated in the base map.
In-game advertising in the Xbox 360 version included a campaign for United States presidential candidate Barack Obama in October 2008, paid for by the Obama campaign — the first time a US presidential candidate purchased in-game advertising.
Burnout Paradise was met with very positive reviews on release. Aggregate scores on both GameRankings and Metacritic averaged 88 out of 100. Reviewers consistently praised the open world implementation, the game's sense of speed, and the freedom it afforded players. Spike TV, GameTrailers, and GameSpot all awarded it Best Driving Game for 2008. GameSpot also named it Best Downloadable Content of 2008. The Academy of Interactive Arts and Sciences awarded it Racing Game of the Year at the 12th Annual Interactive Achievement Awards. The game has since been cited as one of the greatest video games ever made.
The Burnout Paradise Remastered edition, which included nearly all previously released downloadable content and added support for up to 4K resolution at 60 frames per second, received somewhat lower but still positive scores from critics.