This film was based on The Saturday Evening Post's Paul Gallico's short story "The Man Who Hated People", published in the 28 October 1950 edition, which was inspired by the children's puppet show Kukla, Fran and Ollie (1947). Due to the success of the film, Gallico expanded the story into a novella.
"Lili" was adapted by Michael Stewart, with music and lyrics by Bob Merrill, into the 1961 stage musical "Carnival!" The stage version was produced by David Merrick and directed and choreographed by Gower Champion. It starred Anna Maria Alberghetti, Jerry Orbach, Kaye Ballard, Pierre Olaf, and James Mitchell and played for 719 performances.
The puppets were made by the team of Paul E. Walton and Michael O'Rourke, famous cabaret puppeteers, who founded the Olivera Street Puppet Theatre in Los Angeles in 1935. They were considered some of the best puppet makers and puppeteers in the world at the time and were particularly known for their marionettes, not the hand puppets used in this production. Their work was rarely filmed but can also be seen in Puppet Show (1936).
The earliest known appearance of the "smiley" emoticon, :-), was in an ad for this film in the New York Herald Tribune on 10 March 1953, page 20, columns 4-6. The film opened nationwide, and this ad possibly ran in many newspapers. It read: Today You'll laugh :-) You'll cry :-( You'll love 'Lili'" This should not be confused with the graphical yellow "smiley face," which was first drawn by Harvey Ball some 10 years later.