When Amol Palekar narrated the script to Shahrukh Khan, the first question he was asked was if his company Red Chillies could produce the film. The second question was if Palekar could give him a part in the film, no matter how small it was. He got the dual role of Kishen and the Ghost.
This movie was selected to be India's official entry to the Oscars over Swades: We, the People (2004) and Escuridão (2005).
The Rajasthan desert in the film was originally to have been CGI, which would have made this the first Hindi film with a CGI background, but it was too expensive, so an artificial desert was created.
At one point, Paheli was supposed to be Kajol's comeback film. She had multiple offers to make a comeback with BR Chopras Baabul 2006, Karan Johar's KANK 2006, Red Chillis Paheli but she finally chose Aditya Chopras Fanaa 2006 as she felt she had a much powerful role in that film
The film was shot in 47 days.