Frank Capra's first cut of the film ran for 6 hours. The first public preview took place in Santa Barbara when the film ran for 3 1/2 hours. Re-shooting and re-cutting followed immediately after this disastrous preview.
The California State Censor Board insisted on having two signed affidavits from Columbia that the model doubling for Jane Wyatt in her nude bathing scene had her breasts covered. The affidavits were duly supplied though the model in question apparently was indeed bare-breasted, though as the scene is in long shot it's virtually impossible to tell.
Many scenes were shot at the Los Angeles Ice and Cold Storage Warehouse where Capra had 13,000 square feet of refrigerated space at his disposal. Nearly four miles of ammonia piping cooled the soundstage. Cinematographer Joseph Walker experienced a lot of problems in this location as the extreme cold created static electricity which damaged his film stock.
Some previously missing live action footage, totaling 1 minute and found on a badly-worn 16mm print, was discovered in 2014, and incorporated into the reconstructed 132-minute version. This footage replaces the stills used in the scene involving Conway's meeting with the High Lama, leaving yet about 6 minutes of the film represented by still photos only. This newly reconstructed version, scanned in 4K, premiered at the 2014 Cannes film festival.
Frank Capra hated screen tests; scripts were developed with specific actors in mind. Ronald Colman was first choice to play Conway from the very beginning. It was only over who should play the High Lama that he had problems and had to resort to screen tests.
The part of the paleontologist was not in the original novel but was developed for Edward Everett Horton by Frank Capra. Horton improvised the scene when he is startled by the mirror in the lacquer box when Capra asked him to suggest some business for that scene.
The Lamasery set was, at the time, the largest single standing set in terms of square feet built for a motion picture of the sound era. The set was built on the Columbia ranch in Burbank with the rear of the Lamasery backing up to the intersection of Verdugo Avenue and Hollywood Way.
Soundman Edward Bernds came up with the idea of achieving a faster, barbaric tempo for the previously slow-moving refueling scene by having the tribesmen hack off the tops of the gasoline cans with bayonets and slosh the gasoline out. Frank Capra liked the idea and included it.
Studio head Harry Cohn didn't like Sam Jaffe's performance as the High Lama and insisted that Capra shoot it with another actor. Capra had to submit to this request and a test with Walter Connolly was made, with Cohn even insisting on an expensive new set being built specially for it. Despite loading the dice in Connolly's favor, the consensus was that his test wasn't anywhere near as good. So Jaffe won the part back, though he still had to re-shoot all his scenes as they were deemed to be far too lengthy and wordy.
An alternate happy ending was filmed because Columbia head Harry Cohn thought the original ending was too ambiguous. In this alternate version Jane Wyatt spots Ronald Colman walking towards Shangri-La. The footage still exists but was never used.
Ronald Colman recorded a audio version of the story for Decca Records on September 15 & 16, 1944. Directed by George Wells with music by Victor Young, the story was told over six sides of a three disc 78 rpm album (released as Decca DA-402). The recording resembled Hilton's original novel more than the film.
The trivia items below may give away important plot points.
Originally there was an opening prologue in which a weary Ronald Colman on a cruise ship is prompted to tell his amazing story of the land of Shangri-La. Although alluded to in the closing passages of the film, no footage of this prologue has ever been found. Frank Capra claimed he burned it.
Despite the vehement denials of Frank Capra, Walter Connolly was tested for the role of the High Lama in a test directed under protest by Capra himself, something that has been confirmed when photographs of Connelly in make-up as the Lama were published in the 90s in Movie Collector magazine and other publications. Connolly's test was made after the initial make up used to shoot the scenes with Sam Jaffe in the role was deemed unacceptable. After Connolly's test, Capra reshot the scenes with Jaffe in improved makeup. Two other actors were considered for the role before Jaffe. English actor A.E. Anson was actually tested but died two days after the it was made. Henry B. Walthall was scheduled to be tested but died before one could be made. The third test was of Jaffe, and he got the part. Capra has been quoted as saying that Connolly was considered for the Thomas Mitchell role, but was committed to another project. Capra added that Connolly and Charles Laughton, who was also rumored for the part, were both too fat to play a 200-year-old ascetic. It was only after his death that studio documents relating to Connolly's test were unearthed.