The film was, at first, not supposed to be a sequel to Honey, I Shrunk the Kids (1989). Originally titled "Big Baby," it was about a young toddler who grew to giant size by a freak accident involving a growth ray and eventually terrorized Las Vegas in a non-violent, yet Godzillaesque way. Disney saw the possibilities of making this into a follow up to Honey, I Shrunk the Kids and rewrote the script to the movie. Whereas most of the characters from Big Baby were rewritten as characters from Honey, I Shrunk the Kids, there was no character that could take the place of Amy Szalinski, Wayne and Diane's eldest child and only daughter, portrayed by Amy O'Neill. Instead of excluding her character from the story, Amy makes a brief appearance in the beginning of the film, and it is explained that she is leaving for college.
Much of the the dialogue between Wayne and Adam, such as the bedtime story and feeding time, was improvised by Rick Moranis in response to whatever Daniel Shalikar and Joshua Shalikar, the twins who played Adam, happened to say.
Adam Szalinski is played by twin brothers Joshua Shalikar and Daniel Shalikar. Most films and TV shows that involve small children typically cast older children (typically ages 3 and 4) that look younger than they really are, however the Shalikars were 2 years old during the film's production, the same age as the character they were playing was supposed to be, due to the fact that they were fairly easy to work with and took direction well. Dan was noted as being the more adventurous of the two, while Josh was more cautious.
(at around 1h 8 mins) The scene when Adam was about to put the car in his mouth and Nick said, "Adam, don't eat us", was a nod to Honey, I Shrunk the Kids (1989) in which Nick said, "Dad, don't eat me".
Actor Alex Daniels portrayed Adam in his "blown-up" form (he is credited as "Uncle Yanosh"). Daniels wore a 40-pound, electronic-headed "Adam suit" for the role, and was coached on how to mimic the movements of a toddler. Once suited up on the set, Daniels had to magnify his movements so they would show through the costume's heavy, clumsy folds. Occasionally, the heat inside the outfit proved too much for its coolant system, a vest with ice water pumped through tubes, prompting crew members who noticed Daniels faltering to yell, 'Get Alex outta there!'
As a result of the film, Disney later found itself the subject of a lawsuit. The suit was filed in 1991 by Mark Goodson Productions director Paul Alter, who claimed to have come up with the idea of an oversized toddler after babysitting his granddaughter and watching her topple over building blocks. He wrote a screenplay titled "Now, That's a Baby!", which had not been made into a film but had received some sort of treatment beforehand. Alter claimed there were several similarities between the movie and his script, which consisted of the baby daughter of two scientists fall victim to a genetic experiment gone wrong instead of an enlarging ray. The case went to trial in 1993, with the jury finding in Alter's favor. Disney was forced to pay $300,000 in damages as a result.
(at around 1h 8 mins) At the beginning of the film, when Wayne first goes into Adam's room, the meowing Kit-Cat Clock (from Honey, I Shrunk the Kids (1989)) can be seen in the upper-left corner of the screen.