Director Richard Elfman and star Marie-Pascale Elfman, who were married at the time, financed the movie by buying, renovating and selling houses. They ran out of money and the movie was rescued by a benefactor.
The heavyset boy who appears twice (during the Kipper Kids' boxing musical number, and who Grampa Hercules steals the pie from), was someone that Richard Elfman had known from his neighborhood. He was so shy that during his intended musical performance, he froze up on camera. His mouth was superimposed with Matthew Bright's.
In the film's commentary, Richard Elfman reveals that the dysfunctional Hercules family was said to be inspired by some "trailer park types" he had lived next door to in Venice: "the father would yell at the mother, the mother would yell at the son, the son would yell at the daughter, the daughter would kick the dog."
The pin-up girl painting that King Fausto (Herve Villechaize) works on was done by Los Angeles-area painter Robert Blue, which was stolen from the painter's studio not long after the film's completion. In real life however, Villechaize was himself a skilled painter.
According to director Richard Elfman, the film was originally shot in black and white and then intended to be shipped out to China, where each frame of the original black and white print was to be individually colored by hand, but this plan was found to be inefficient. In 2008, the film was digitally colorized under Elfman's authorization and supervision.