This is an adaptation of a Friedrich Dürrenmatt novel that was based on a story he wrote for the 1958 German movie It Happened in Broad Daylight (1958) (which had a slightly different, not as dark ending). In that movie the murderer was played by Gert Fröbe who would six years later play Auric Goldfinger in the James Bond movie Goldfinger (1964).
The child murders depicted in the film were loosely based on actual cases that had been worked by Det. Joe Depczynski, the film's technical advisor. However, the cases were not thought to be the work of a single killer, as the film depicted, nor did the real detective come to the same end that Det. Jerry Black did.
The picture was a passion project for writer/director Sean Penn and actor Jack Nicholson. Unfortunately, the screenplay was turned down by every major studio in Hollywood. Producer Elie Samaha, and his studio Franchise Pictures, who specialized in picking up screenplays in turnaround, quickly pounced on the material and signed up Penn and Nicholson for a reduced fee. The pair agreed as long as Penn could have complete creative and casting control.
The trivia item below may give away important plot points.
According to Tom Noonan, additional scenes were supposed to be filmed that explain that Jackson was not the killer. But the production company had just experienced the failure of Battlefield Earth (2000) and demanded that the film finish under budget. The production was rushed and a few scenes were left unfilmed.