The movie is set in Three Oaks, Michigan, where town exteriors were filmed. Filming also occurred at the Old Republic House in New Carlisle, Indiana, La Porte, Indiana, and at Starved Rock State Park in Utica, Illinois.
The reindeer used for Prancer was a pregnant female. Pregnant reindeer keep their antlers for longer, and she was needed so she wouldn't shed before filming was over.
The film was originally going to be produced by Dino De Laurentiis, but the rights ended up with his daughter Raffaella De Laurentiis, who agreed to make the film for Cineplex Odeon.
The film was originally set to be released by Cineplex Odeon Films, owned by the titular theatre chain, one of the largest in North America. However, due to a regime change, Cineplex Odeon dropped its distribution rights, and it eventually ended up at Nelson Entertainment who had a distribution deal with Orion Pictures.