After graduating from high school, Naka decided to skip university and stay in his home town. During this time, Naka worked long hours at various menial jobs. After quitting his last job, Naka saw that Sega was looking for programming assistants. After a brief interview, he was hired and began working on a game called Girl's Garden, which earned him critical praise and fan appreciation. He programmed the original Sonic the Hedgehog game, while Naoto Ōhshima designed the character and Hirokazu Yasuhara planned the stages. Naka has also produced several other titles like Nights into Dreams..., Burning Rangers and Phantasy Star Online. In early games he was often credited as "YU2" (in reference to Yu Suzuki) and "Muuu Yuji". He is one of the few famous Japanese game creators to speak fluent English.
When asked about the famous Nintendo vs. Sega console wars of the 1990s in an episode of Icons, he states that his intentions while making the original Sonic the Hedgehog game were different than the direction it was taken, and that the comparisons between Sonic and Mario were a misunderstanding by the media. He also says that he is good friends with Nintendo http://www.youtube.com/watch?v=kHj6BSsFAIk</ref> and that Sega had respect for Nintendo and the Mario games which were viewed as a watermark of quality for Sega to strive.Sega's Yuji Naka Talks!. Gamespy. Retrieved on 3 January 2015. “I will go on the record here and state that we at Sega have always had nothing but the utmost respect for Nintendo and the Mario games. Even when they were our direct competitor in the hardware arena, we have viewed the games as a watermark of quality for us to strive towards. It is a pleasure and an honor for us to work with Nintendo as a third party today.”