Initially planned as a Holiday 1980 release, Universal delayed the release until January 1981, hoping to take advantage of the buzz surrounding the release of Nine to Five (1980), which also stars Lily Tomlin.
John Landis was the original director of the project. In his version, the film would have ended with the heroine giving a speech in Washington D.C. when she was less than a foot tall. Universal wanted the budget scaled back from $30 million to $10 million, so the script was rewritten and Landis dropped out.
Robert Blalack's tests exist of Lily Tomlin in various scenes that were shot for the film in the 3D format, which was having a resurgence of interest in the US at the time. It was produced and released in 2D, however.
Make-up artist Rick Baker portrays Sidney the Gorilla himself in this film which was released in the same 1981 year that An American Werewolf in London (1981) was released, the film that Baker won the first ever Academy Award (Oscar) for Make-Up.
The film's title is a variation on and spoof of The Incredible Shrinking Man (1957) made and released around twenty-four years earlier. In fact, both movies are based on the same source Richard Matheson novel "The Shrinking Man".
This movie marks the film debut of Justin Dana, who plays the Kramers' son Jeff. Jeff has a poster on his bedroom wall of the TV show CHiPs (1977), on which Justin made his television debut just three years prior.