Instructions
Defeat the Dragon Universe mode with all 11 initial characters. After all 11 characters have been beaten the game at least once, you will unlock the Dragon Arena. The Dragon Arena is a special game mode where you can take any existing character you have previously unlocked and pit them against an endless series of opponents in order to increase their level.
Fight in the Dragon Arena with any unlocked character. Defeat all opponents and level the character up until he is between level 20 and level 40. The key to unlocking Cell Jr. is your character's level. You can either raise your level in the Dragon Arena or by playing the Dragon Universe mode.
Continue to fight in the arena. You will be tasked with defeating a random selection of fighters that get progressively higher in level as you go. When your character is between level 20 and 40 and you are facing opponents at least 15 levels higher, there is a chance that Piccolo will break into the fight.
Defeat Piccolo by any means necessary. If you are killed, then you will need to exit the Dragon Arena and start the process again. After you defeat Piccolo, Cell Jr. will break in and challenge you to a fight.
Beat Cell Jr. in any way you can. Cell Jr. is a very tough character and it may be a difficult fight. In addition to having some very powerful attacks, Cell Jr. also has 3 lives, all of which must be depleted before he is completely vanquished. After you win against Cell Jr., you will receive the Cell Jr. capsule and unlock him for playing in other game modes.
Exit the Dragon Arena after Cell Jr. is fully overcome and return to a character select screen. Cell Jr. will now appear among the rest of the Dragon Ball cast as a playable character.