The first anime movie to receive a wide release in the United States. Production began in 1982, with the intention of the film being a big-budget showcase of Tokyo Movie Shinsha Co.'s animation style to American audiences. The efforts to make it a movie that would appeal to both Japanese and American audiences resulted in the film having a long and troubled production history, as different arms of production (writing, casting, animation, etc) received conflicting instructions as to how to proceed with the film. Over the course of seven years, numerous powerful figures from both Japanese and American film-making were hired in various attempts to salvage production. Hayao Miyazaki and Isao Takahata worked for a year, between 1982-1983, but ultimately left due to creative differences with the American production company; Miyazaki later called it "the worst experience" of his career. Gary Kurtz and Chris Columbus were each brought on board at different points to act as directors/producers/writers, and Ray Bradbury was hired to write a new script. It is unknown how much each contributed to the final product. Although the film premiered in Japan in 1989, it did not receive its intended American release until 1992, a full decade after the start of production; in a final effort to market the film to American audiences, several minutes of the movie had to be edited in order to secure a softer rating.
Because the film was released in Japan in 1989, and because most of the Nintendo Entertainment System's games were designed in Japan, the NES tie in, Little Nemo: The Dream Master (1990) was available in the US for several years before the film was released. As the American cartridges made no reference to the film, most players were unaware that the game was, in fact, a tie-in to the movie, and not simply inspired by the comic strip.
This film includes several references to Winsor McCay's other work. For instance, Gertie the Dinosaur is seen holding up a bandstand cover, and Nemo's mother asks him if he has been "sneaking pies again," in reference to "Dreams of the Rarebit Fiend."
The Imp was the only character from the original comic strip to not make an appearance in this movie due to his racial caricature.
King Morpheus of Slumberland shares his name with Morpheus the Greek god of dreams. Morpheus is also the name given to the hero of Neil Gaiman's Sandman comic series, which itself occasionally made references to McCay's comics.