Subhash Ghai was making Devaa with Amitabh Bachchan which was shelved. It was said that Devaa was made as Khal-Nayak, with a new starcast, new a tittle and some script changes. Amitabh Bachchan, his role, was played by Sanjay Dutt, which was the second film with Subhash Ghai, the first was Vidhaata. The were also to work in Hero but then a newcomer, Dev Anand's discovery, Jackie Shroff did the role.
Slumdog Millionaire song "Ringa Ringa" was inspired from "Choli Choli Ke Peeche".
Khal Nayak was the first Hindi movie to do massive business theatrically in Canada and America. The collections on the opening weekend exceeded some Hollywood movies released around the same time.
Nana Patekar was in talks of playing the title role. At that point Subhash Ghai wanted the character to be middle aged and the films budget was going to be very small. Ghai had told Patekar to get ready as he was going to sign him. But the more Ghai wrote the film, the more he realized the character needed to be a misguided youth. Patekar told Ghai it was OK, but held a bad grudge against him .Nana would continue to bad mouth Ghai in several interviews. Patekar would tell the press that Ghai wanted him to to practically work for free.
The film was almost on the verge of no release because of Sanjay Dutt's arrest in the 1993 Bombay blast case.