The 1987 sequel, Cosmic Soldier: Psychic War, was originally released for the MSX2 computer in Japan. In America, the game was released by Kyodai, and they changed the name to Psychic War and released the game for MS-DOS computers. The MS-DOS version censors Kayla's clothing. It changed the turn-based combat of its predecessor to a unique "tug of war" style real-time combat system, where battles are a clash of energy between the party and the enemy, with the player needing to push the energy towards the enemy to strike them, while being able to use a shield to block or a suction ability to absorb the opponent's power. The game also improves upon the conversation system of its predecessor and more closely resembles the one in Digital Devil Story: Megami Tensei released around the same time.

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