Select "Team Battle" at the main menu screen. Soon as the character select screen appears, press up, up, down, down, left, right, left, right, start. On the far right Master Ishii will appear.
Submitted by Ticker
At the "Press Start" Title screen. Hold, L1, L2, R1, R2, all at once and wait until your hear 3 bell dings. Now hit start, and at when you go to select fighters, some will have different clothers.