Some posters for the film featured a long blurb that read: "Somewhere, Under The Rainbow, way down low--Chevy Chase, Carrie Fisher and 150 midgets are fighting valiantly to save our country against all Oz!".
Jerry Maren, who plays the pitcher in the kitchen baseball scene, was actually an actor in The Wizard of Oz (1939), in which he played (uncredited) a Lollipop Guild Member Munchkin. Maren later said he regretted making this film, because it was in such poor taste, and nothing remotely like what happened while filming "The Wizard of Oz".
According to the "Mutant Reviewers" website, "part of the inspiration for 'Under the Rainbow' comes from rumors that the little people did party hard and tear apart the hotel they stayed at during filming of The Wizard of Oz (1939). Those rumors do not seem to be true, but were used as basis of this film."
The film was nominated for two Razzies - Worst Musical Score and Worst Supporting Actor (Billy Barty) at the 2nd Golden Raspberry Awards in 1982, but the movie failed to take home a gong in either category.