The CDZ was released in 1996 as the Japanese market replacement for SNK's previous effort, the Neo Geo CD. The NGCD had met with limited success because it was plagued by slow loading times that could vary from 30 to 60 seconds between levels, depending on the game. Although SNK's American home entertainment division quickly acknowledged that the system simply wasn't capable of competing with 3D-capable powerhouse systems of the day like Sega's Saturn and Sony's Playstation, SNK corporate of Japan felt that they could continue to maintain profitable sales in the Japanese home market by shortening the previous system's load-times.

Popular rumor suggests that SNK made several changes to the CD hardware to end up with the CDZ, most prominent is the rumor that they increased the CD-ROM drive speed from 1x to 2x. The truth of the matter is that the CDZ system was internally identical to the outgoing model, save for the fact that it had a larger amount of internal system memory, creating more temporary storage memory within the system and thus reducing load times by minimizing the need to read from game discs for level information. Despite the reduced load times, they weren't reduced enough to make a notable difference. In addition to this, the console has a design flaw that causes it to overheat after certain periods of time, breaking the console in the process and making it hard to repair.

The CDZ console was the third of three generations of CD system offered by SNK, the first two being the "front-loader" CD system and the "top-loader" CD system. Like the original "front-loader" style CD system, the CDZ was officially sold only in Japan during it's production. However it's lack of a "region lock" feature and the fact that it could play older CD software made it a popular import item for enthusiasts in Europe and North America. Today they can be found sporadically on the internet but ultimately, the Neo Geo CD was considered a failure, mainly because of the lack of marketing and the long load times.