This film is actually the third installment of the Ju-on series, and the first to get a wide theatrical release. It was preceded by two low budget films from 2000 known as (Ju-on: Rancore (2000) and Ju-On: Rancore 2 (2000)), whose storylines are continued in this sequel.
The house used in the film was not a constructed set but a real location, which had to be rented for film production. It became a tourist attraction following the film franchise's popularity. The house was demolished in 2019.
Toshio's spirit is often heard meowing throughout the film. Not only does this imply that his spirit merged with his deceased cat Mar, but it also relates to an old Japanese legend where the damned spirits of lost children become strays and as a result, produce a cat's meow.
Kayako and Toshio are based on the Japanese legend of the Onryo, a vengeful spirit that unlike western ghosts, can physically manifest to attack and kill victims whereas Western ghosts are just energy and can't physically appear. They manifest when they are killed in a state of deep rage as explained by the opening title card.
It took 2 hours to apply the white makeup to Takako Fuji and Yuya Ozeki in order for them to play their ghostly incarnations of their characters.