Lisa Henson had taken a course in folklore as an undergraduate at Harvard, and suggested to her father Jim, that he could use his creature shop to accurately realize these tales, and exploit the visual aspects of the stories.
Jim Henson hadn't actually thought of having the Storyteller's dog talk, but Anthony Minghella assumed from the outline, that since this was a Henson project, any animals would talk, and thus the Storyteller had a talking dog.
Jim Henson originally wanted the Storyteller to be a puppet. Ron Mueck even designed and built a puppet head to try out this concept, but after he tested what an actor could look like with prosthetic facial changes, he suggested it would be more effective to have a live actor. Sir John Hurt was given a somewhat puppet-like appearance, with a prosthetic nose, sizable ears, and much make-up.
Steve Barron was selected to direct the pilot, "Hans My Hedeghog". Jim Henson was already familiar with his work, because Barron directed two music videos for Labyrinth (1986). Barron persuaded Henson to shoot the series on 35mm film rather than video, and developed its unique visual style. All subsequent directors were told to absorb this style before directing their own installments. Series Writer Anthony Minghella even incorporated Barron's use of silhouettes years later when he directed The English Patient (1996).
The trivia item below may give away important plot points.
In folklore, three parts often represent the past, the present, and the future (which are mentioned in the intro narration). However, it also used to be interpreted as a cycle of life: life, death, and rebirth. The number three features in every episode of the series: The Soldier and Death - The Soldier helps three beggars and is rewarded each time. He also captures three geese the first time he uses the magic sack. Fearnot - Fearnot comes from a family of three (father, brother, and Fearnot) and is tricked by three bullies early in the story. It takes three encounters before he finally learns how to shudder (encountering the swamp creature, the half-demon in the castle, and the thought of losing his sweetheart). The Luck Child - Lucky survives three attempts on his life by the wicked King (thrown over a cliff, sent to the castle with a letter instructing the queen to kill him, and being sent to the Griffin's lair). A Story Short - The Storyteller loses to the Beggar three times while playing dice. He loses his money, his wife, and his own self. Hans My Hedgehog - The Princess, after marrying the Grovelhog, learns he sheds his quills each night, and she has to keep it a secret for three nights, in order to break the curse. When she fails and he runs away, she searches the world and wears out three pairs of iron shoes in the process. The Three Ravens - After the Princess' three brothers are transformed into ravens, she has to keep silent for three years, three months, three weeks, and three days to break the curse. She also gives birth to three sons after marrying the Prince, and speaks three minutes before noon (calling out three times) on the appointed day. Sapsorrow - Youngest of three daughters, Sapsorrow commissions the making of three dresses to stall the arranged marriage with her father. She then wears those dresses on three different nights to woo the Prince. The Heartless Giant - Youngest of three princes, Leo tries to find the Heartless Giant that he released. On the way, he helps three animals (bird, fish, and wolf) who later aid him. When Leo tries to find where the Giant's heart is hidden, he finds out after three tries. The True Bride - Anja completes three tasks given to her by the Troll with the help of the Thought Lion. The Lion also gives her three walnuts with gifts hidden inside to barter with the Trollop.