The hero of this film is a boy named Harry Potter, who is surrounded by a fantasy world of witches, wizards and magic - eleven years before J.K. Rowling's Harry Potter novels swept the publishing world.
Brad Hall and Julia Louis-Dreyfus play an on-screen couple in this film. In real life, the two were dating and would marry the year following this film's release. It remains the only live-action film in which they starred together, although both provided their voices to A Bug's Life (1998).
As production began, Michael Moriarty complained to director John Carl Buechler that he didn't understand his character. The day that they shot the scene in which the Potter family moves into the building, Buechler snatched a bucket hat off the head of first assistant director Mauro Sacripanti and put it on Moriarty. "I look ridiculous," Moriarty said. "So Harry Potter is ridiculous?" A light-bulb went off and there was no further discussion of the character.
Although she remained covered in the film for her transformation into the Faery, an on-set photo of Julia Louis-Dreyfus was published in the March 1986 issue of Cinefantastique Magazine in which her bare breasts were visible.
"Cantos Profane," otherwise known as "The Troll Song," was recorded prior to shooting and set the tone for the rest of Richard Band's musical score. The characters were supposed to perform it as a full-blown production number, but due to limitations in the low-budget puppets they had to grunt along to the music.
In John Carl Buechler's original story treatment, Torok was a monster who was systematically killing off the inhabitants of the building slasher-movie style. Producer Charles Band wanted to create a PG-13 movie, so the story was altered and the fantasy element was created.
The role of Malcolm Mallory was explicitly written for Phil Fondacaro but director/FX man John Carl Buechler was pressured to cast Billy Barty. Originally, a fully animatronic puppet was intended to have been utilized for Torok the Troll, but Buechler scrapped his plan and sculpted a creature costume directly onto Fondacaro's life cast, knowing that the producers wouldn't want to pay two different actors.