The first anime movie to receive a wide release in the United States. Production began in 1982, with the intention of the film being a big-budget showcase of Tokyo Movie Shinsha Co.'s animation style to American audiences. The efforts to make it a movie that would appeal to both Japanese and American audiences resulted in the film having a long and troubled production history, as different arms of production (writing, casting, animation, etc) received conflicting instructions as to how to proceed with the film. Over the course of seven years, numerous powerful figures from both Japanese and American film-making were hired in various attempts to salvage production. Hayao Miyazaki and Isao Takahata worked for a year, between 1982-1983, but ultimately left due to creative differences with the American production company; Miyazaki later called it "the worst experience" of his career. Gary Kurtz and Chris Columbus were each brought on board at different points to act as directors/producers/writers, and Ray Bradbury was hired to write a new script. It is unknown how much each contributed to the final product. Although the film premiered in Japan in 1989, it did not receive its intended American release until 1992, a full decade after the start of production; in a final effort to market the film to American audiences, several minutes of the movie had to be edited in order to secure a softer rating.

In the opening sequence, the sheets on Nemo's bed are removed when he nearly falls off, but are reattached by the time the train appears.

The film was originally 94 minutes. When the film was released in the US in 1992, some intense sequences and additional material was cut to obtain a G rating and to make the film shorter. The Japanese DVD box-set and 2004 US DVD restored these sequences.

Featured in Siskel & Ebert: Single White Female/Little Nemo: Adventures in Slumberland/Light Sleeper/Rapid Fire/Diggstown (1992)