Unlock the characters in the following order. Certain characters can only be unlocked after reaching a certain requirement. It is recommended that you play with each character on the HARD difficulty setting so you do not need to backplay time after time.

Smoker
Win the game with Roronoa Zoro (Hard mode suggested. Can be unlocked on any difficulty setting).

Wiper
Win the game with Monkey.D.Luffy (Hard mode suggested. Can be unlocked on any difficulty setting).

Omu
Win the game with Tony Tony Chopper (Hard mode suggested. Can be unlocked on any difficulty setting).

Mr Crocodile
Win the game with Nico. Robin (Hard mode suggested. Can be unlock on any difficulty setting).

Enel
After unlocking all the other characters above win the game with Wiper and Monkey.D.Luffy on Hard difficulty setting. (Refer to unlocking Wiper).

Hina
Once you've gained Enel, win the game with Usopp on Hard difficulty setting.

Bon Clay
After gaining Hina, win the game with Sanji on Hard difficulty setting.

Portgas.D.Ace
After unlocking all characters above, beat Training mode with all of Luffy's crew and then win the game with Smoker on Hard difficulty setting.

Red Hair Shanks
Once you've gained every other character, win the game on Hard mode using all of Luffy's crew then win the game once more with Luffy on Hard mode.

Luffy's Crew
Luffy's crew consists of Monkey.D.Luffy, Roronoa Zoro, Nami, Tony Tony Chopper, Usopp, Sanji, Nico and Robin.