In the original script, King Agamemnon was introduced as: "The warrior took off his helmet, revealing someone that looks exactly like Sean Connery, or an actor of equal but cheaper stature." To Terry Gilliam's surprise, the script ended up in Connery's hands. He expressed interest in the part and his agent approached them for the role.
According to Terry Gilliam, David Rappaport believed he was given his part for his acting ability alone, without size being a contributing factor, and as a result, did not socialize with his co-stars. During the Invisible Barrier scene when the other bandits retaliate against Randall, it was basically the actors expressing their frustrations with Rappaport.
Ruth Gordon was cast as Mrs. Ogre but was injured before production. Katherine Helmond was originally slated to play the role in heavy make-up to look like her husband, but then decided it would be funnier if Mrs. Ogre was an ordinary person. Terry Gilliam agreed.
Whilst filming the sequence in Sherwood Forest, in which the Time Bandits inadvertently crash into Vincent (Michael Palin) and Pansy's (Shelley Duvall) carriage, Terry Gilliam had scaffolding built for the actors to jump off. When directing the scene, Gilliam instructed that they were to jump in such a way as to land around Palin and Duvall without actually falling on to them. To better illustrate what he meant, Gilliam then climbed to the top of the scaffolding and without hesitation jumped off, only to plummet directly on top of Shelley Duvall.
In 1996, Terry Gilliam and Charles McKeown collaborated on a script for Time Bandits 2, bringing back most of the original cast, with the exceptions of David Rappaport and Tiny Ross who had passed away a few years before, and owing to Jack Purvis being paralyzed from a car accident, his character was written to be in a similar state. But following the death of Purvis, the project was shelved indefinitely.
In the published screenplay, there are several black & white stills from scenes that do not appear in the final film. These include the 'spiderwomen' sequence and Agamemnon giving Kevin a knife (this is later used when Og takes it from Kevin's satchel to unlock their cage). Terry Gilliam stated at the 2011 Bradford Film Festival in the UK that he believes all the cut footage to be lost.
Young Craig Warnock, who played Kevin, won the role after a wide search for the right child actor. An agent had seen Warnock's brother and sent him to an audition. That Craig went with him was merely a coincidence. Director Terry Gilliam, however, took more interest in Craig than his sibling, noting that the young man seemed rather intelligent yet aloof and quiet, as opposed to the stereotypical "cute" little boy.
The Evil Genius's apparatus on his head was influenced by H.R. Giger's work on Alien (1979), which also starred Ian Holm. Coincidentally, one of the Evil Genius's lines is "And the day after tomorrow." Two decades later, Ian Holm would star in The Day After Tomorrow (2004).
In the screenplay, when the Supreme Being chases after Kevin and the gang, He initially appeared as a "classical" depiction of God: robes, white beard, etc. A picture of this version of the Supreme Being appears in a published book of the screenplay, suggesting the Supreme Being scenes were filmed as written, but ultimately the "classical" depiction was replaced with the "floating head" version of the Supreme Being seen in the film.
On the Special Edition DVD Terry Gilliam explains why Marcus Powell is still credited as Horseflesh, even though he is apparently never seen. As it turns out, Horseflesh can be seen standing next to David Warner's Evil as he gazes into the bowl of water to track the Time Bandits at one point in the film.
According to Terry Gilliam and Michael Palin's interview on the DVD, David Rappaport was so into the character of Randall that he didn't socialize with his co-stars and kept demanding close ups on himself.
Agamemnon was originally supposed to appear at the climactic battle against Evil leading an army of Greek soldiers and being killed, but it could not be worked into Sean Connery's schedule (they only had him for about two weeks, as his role was basically a cameo). Having Connery appear as the fireman at the end was the compromise they devised to bring things full circle for Kevin.
In his book Monty Python: The Case Against Irreverence, Scurrility, Profanity, Vilification, and Licentious Abuse, Robert Hewison describes the dwarfs as a comment on the Monty Python troupe. The nice one, Fidgit, is said to represent Michael Palin; the self-appointed leader, Randall, John Cleese; the acerbic one, Strutter, Eric Idle; the quiet one, Og, Graham Chapman; the noisy rebel, Wally, Terry Jones; and the nasty, filth-loving one, Vermin, Terry Gilliam.
The cowboys, Greek archers, tank, spaceship (Micronauts Mobile Exploration Lab), and all of the attackers that fight 'Evil' at the end are actually the counterparts of the same toys seen in Kevin's room; in some shots as Kevin runs through Evil's fortress, giant 'Lego' blocks can clearly seen as part of the fortress itself.