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Here’s my personal method for creating solid game lore using AI:

  1. First, explain your general worldbuilding concept to the AI and make sure it understands the kind of setting you want.
  2. Then, tell the AI all your wild, chaotic, and possibly deranged ideas. (Unless you’re using a super strict AI, it won’t judge you—trust me.)
  3. Ask the AI to write a long piece of flavor text. If it doesn’t feel right, revise your prompt and tweak it again and again until it clicks. (I’ve gone through up to 20 iterations, but if the AI “gets it,” sometimes it only takes a few tries.)
  4. Once you’re satisfied with the flavor text, start a new chat session.
  5. Paste the flavor text into the new session, and using a custom template you’ve prepared, ask the AI to write based on that—be sure to emphasize that atmosphere is the top priority.
  6. If any part of the result doesn't sit right with you, repeat the revision process just like in step 3—revise the prompt, tweak the instructions, and try again.

With this method, you can get pretty decent results from AI.
I personally recommend using Claude 4 Sonnet.

One important thing to keep in mind:
You shouldn’t rely on AI to create your lore from scratch.

By design, AI tends to generate “average” or generic ideas.
If you let it handle everything, your world will end up feeling flat and uninspired.
That’s why it’s up to you to inject the madness, the weirdness, the uniqueness.

Always remember—AI is just a tool.