Reportedly, while shooting the movie, the four stars had become close friends, and William Powell even gave up his old habit of hiding out in his dressing room between scenes so he could join in the fun with the rest of the cast. One of the biggest jokes was a running gag Spencer Tracy played on Myrna Loy, claiming that she had broken his heart with her recent marriage to producer Arthur Hornblow Jr. He even set up an "I Hate Hornblow" table in the studio commissary, reserved for men who claimed to have been jilted by Loy.
Just before production started, studio head Louis B. Mayer gave Jean Harlow a $5,000 bonus, primarily in recognition of the surprising profits on her previous film, Suzy (1936), which had brought in three times its cost.
Jean Harlow and William Powell were a couple at the time the film was made. She desperately wanted the part of Connie Allenbury (Myrna Loy's role) so that she and Powell's character would end up together. The director and MGM execs would not heed her demand, however. They always intended on the film being another Powell/Loy vehicle and knew that audiences wanted Powell and Loy to end up together in their films. Harlow was very disappointed but had already signed on to the film and had no choice but to play the role of Gladys Benton. In the end, she liked the film and agreed that she was more suited to the role of Gladys.
Myrna Loy recalled in her 1987 autobiography that a good time was had by all during the shoot - "Libeled Lady was one of the best of the so-called screwball comedies, with a great cast, and Jack Conway directing us at breakneck speed." She praised her co-stars and also expressed her love for working with Walter Connolly, whom she described as "darling."
Some of the cast and crew travelled to the California mountains during production in order to shoot exteriors of the bucolic scenes. They spent nearly a week living cosily in small cabins, according to Myrna Loy, and enjoying the rustic scenery far from the bright lights of Hollywood. This was where William Powell filmed his bit of slapstick in which he must pretend to be an expert angler in order to impress Connie's father. "It's a hysterical piece of work," praised Loy, "but then Bill was a very gifted man, able to do great comedy and tragedy, everything."
Before the film could be released, the Production Code office once again reared its head. It insisted that a few more tweaks be made to the film in the editing room in order to downplay any perceived suggestiveness. Even after the picture was finally cleared for release, Joseph Breen still demonstrated some disapproval, citing that parts of the story, in his opinion, "reflect unfavourably upon marriage and the sanctity of the home."