In one scene, Harvey's wife, takes him to the beach where a large electrical sign reads "Happy Birthday". Originally, she was to lead him to the beach as filmed but the Goodyear blimp flies over with the birthday message. Because the camera could not be set up on time for the shot, it could not be used and the blimp was called off (which is why the Goodyear company gets mentioned in the end credits). The chief electrician Ben Batzdorff suggested the alternative and he and his crew put it together on the beach.
The song "Life in a Looking Glass", composed by Henry Mancini with lyrics by Leslie Bricusse, was both Academy Oscar and Golden Globe award nominated for Best Song and Golden Raspberry Award Nominated for the Razzie for Worst Song. The tune won none of them.
The picture was an independent production. The movie was predominantly financed by Blake Edwards and was produced outside of the studio system. The picture however was distributed by Columbia Pictures in the USA, continuing the strong relationship that Edwards had with Columbia during the 1980s, where the studio had been the production house for many of the movies he had directed during this decade.
According to film critic Leonard Maltin, "director-writer [Blake] Edwards gave co-screenplay credit to his own psychiatrist!" for Edwards' earlier movie The Man Who Loved Women (1983). That was Hollywood psychoanalyst Milton Wexler who then worked again on That's Life! (1986) with Edwards which became the second of two screen-writing collaborations of Edwards and Wexler, the pair working together here around three years after The Man Who Loved Women (1983).
Emma Walton Hamilton learned to play "Sentimental Journey" on the saxophone for the film's finale. She would often be in her room in the Edwards' Malibu home practicing the piece with an instructor. She got pretty good at it, too.
The picture has been dubbed somewhat of a family affair. A number of the members of the family of actor Jack Lemmon, actress Julie Andrews, and her husband, director Blake Edwards, appeared in this movie.