(at around 27 mins) When Kristen is in the hospital after hitting her head, the nurse changes into Freddy, who has the vials of blood in his right hand. One of the vials (the one closest to the camera) says "Englund" - the last name of the actor who plays Freddy.
(at around 51 mins) In a brief classroom scene, Alice and fellow students are lectured on the philosophy on dreams. The teacher giving the lecture is played by series producer and New Line Cinema CEO Robert Shaye.
(at around 34 mins) A magazine can be seen in Kristen's room that has a picture of Johnny Depp, who starred in the original 'Nightmare on Elm Street, A (1984)' film and had a brief cameo in the sixth film of the series, Freddy's Dead: The Final Nightmare (1991).
(at around 40 mins) The scene where Alice and Rick are watching home videos was a last minute addition. In an interview with Andras Jones he stated that because of the writers strike and because of Renny Harlin's poor English, he and Lisa Wilcox wrote their own dialogue for it.
Wes Craven and Bruce Wagner came upon with a concept for this film that involved time travel through dreams. However, producers Robert Shaye and Sara Risher felt that this was too high a concept for a Nightmare On Elm Street sequel and didn't think it fit the formula that Craven created with the first film.
Oscar-winning screenwriter Brian Helgeland was hired to write the film after being recommended by Robert Englund, for whom he penned the screenplay to Englund's directorial debut 976-EVIL (1988). The film had a release date set but no script or director, and Helgeland was hired under the condition that he could deliver the script within seven days. He was advised by New Line head Robert Shaye that if the script came in a day late, they didn't want it. Helgeland then flew home to Massachusetts for Christmas and wrote the script sitting at his father's kitchen table. He FedExed the finished screenplay back to Los Angeles and made his deadline. Based on this script, director Renny Harlin signed on, and the film marks Helgeland's first screen credit. Though "976-EVIL" was his first produced screenplay, it was released after "A Nightmare On Elm Street 4: The Dream Master".
During the writing of the film, director Renny Harlin and some of the producers by chance happened to bump into famed director James Cameron. Cameron somewhat facetiously asked Harlin "How are they gonna bring Freddy back to life this time?" To which Harlin (also somewhat facetiously) replied "A dog pisses fire on him and he comes back to life." The idea ended up being used in the film, although in a more metaphorical manner than in a literal sense. (With Robert Englund explaining that the dog urinating fire onto Freddy's remains is meant to symbolize a Hell-Hound and how evil Freddy truly is).
During production, the writers, director and producers couldn't figure out how to kill Freddy at the end of the film. Eventually, during a meeting, they discussed all of the possible ways to kill a villain or creature in a film. (Shooting, stabbing, burning, etc.) They then realized that all of the methods they were thinking of came from external forces. And they decided to do just the opposite - come up with a way for Freddy to be killed by an "internal force." Thus, the concept of Freddy's reflection cause the souls of his victims to revolt and tear him apart from the inside was born.
According to everyone interviewed about the movie in the documentary "Never Sleep Again", no one really knows why Patricia Arquette didn't come back. Renny Harlin and Rodney Eastman, who plays Joey in the movie, stated her agent asked for more money but New Line wouldn't agree. Arquette's child was born in January of 1989. The movie was filmed in early 1988 so it's unlikely she didn't return for being pregnant because at the time of filming, she either wasn't pregnant yet or only a few weeks pregnant. Plus she was in the movie Far North (1988) which was released in November 1988. So her commitment to that film could've been the reason for not returning as Kristen.
Kincade's dog is named Jason, a possible nod to the Friday the 13th slasher films where the slasher's name is Jason Voorhees. What makes this rather interesting is in this movie Jason (the dog) brings Freddy back to life where in Freddy vs. Jason (2003), Freddy brings Jason back to life.
Reportedly, Renny Harlin's original version of the film was considered to be "too campy and ridiculous" by New Line Cinema, which is why some cuts were made on the film before theatrical release. Harlin's original cut had an alternate score and many deleted and extended scenes. These included more scenes with Kristen, including a nightmare scene in which she is chased by Freddy soon after he killed Joey and Kincaid, and an extended version of the beach scene where Freddy's shadow is touching and burning her with sunburns. Small parts of both of these scenes can be seen in US and foreign trailers for the film, and there are also some stills showing the extended beach scene. There was also an additional nightmare scene with Alice dreaming that her father turns into Freddy. It is believed by fans who first discovered these missing scenes that Harlin's original version is lost. Only the original script has all the deleted scenes.
The script wasn't complete during shooting so some drafts had Rick live. Some storyboards were created that had Rick die in an elevator accident but was changed to Karate as it went back to him practicing his craft earlier in the film.
Renny Harlin got the job by refusing to take "no" for an answer. Rather than accept the rejection, he instead showed up at the New Line offices on a daily basis, repeatedly requesting to speak with producer Robert Shaye. For a variety of reasons, they didn't like any of the other directors who came in for meetings about Elm Street 4, and Harlin always seemed to be around. Eventually, his persistence won the day, to some degree because he was so clearly impoverished that his clothes never seemed to change day-to-day and even began to smell. They had to hire him just so he could afford some new clothes, or so Bob Shaye jokes. According to Harlin, Shaye rarely ever spoke to him throughout the shoot even though he would visit the set quite often. That made filming Shaye's cameo scene a bit difficult. The resulting tension meant Harlin lived each day on set like it would be his last because he was fairly positive Shaye was going to fire him at any moment without warning.
Ricks death was originally supposed to happen in the elevator with the elevator falling apart all around him, until he is falling in just dark space. However, according to Renny Harlin, they had already run out of money and were unable to afford this effect. It was then suggested that he live but his funeral scene had already been filmed. So the idea for his karate/dojo death scene was conceived because his knowledge of karate had already been established earlier in the film.