Adapted for the screen by Texas Chain Saw Massacre co-writer Kim Henkel, the plot was very loosely based on the story of Joe Ball (also known as the Bluebeard from South Texas, or the Alligator Man) who owned a bar with a live alligator attraction during the 1930s in Elmendorf, Texas. During this time, several murders of women were committed by Ball, and the legend is that he would dispose of his victims' bodies by feeding them to his pet alligators, but it was never proven that the flesh found in the pit was human. Joe Ball committed suicide at his bar on September 24, 1938 when he was about to be arrested by the police in connection with the murders.
A 16 to 17-foot long mechanical model of a Nile crocodile was used for the effects of the crocodile in the submerged water. A three-foot long "walking model" was used for miniature shots of the crocodile walking under the hotel. The submerged crocodile model was damaged late in the filming after being left in the artificial pool for over 48 hours where water seeped into the rubber foam covering giving it a larger, bloated appearance. It had to be dried out for several days before filming resumed.
Some of the film was to be shot on location in Amarillo, Texas by a second unit to make a few location scenes, but the travel plans fell through due to the high transportation costs, so the filming stayed entirely in Hollywood to keep production costs down.
Filmed entirely on the sound stages of Raleigh Studios in Hollywood, California, which had a large-scale pool that could double as a swamp. Shooting on a sound stage instead of a practical location contributed to the atmosphere of the film, which director Tobe Hooper described as a "surrealistic, twilight world." However, the film eventually proved to be problematic for the director, who left the set shortly before production ended due to a dispute with the producers. But Hooper's good relationship with his actors remained intact. The director later recalled how he worked with actor Neville Brand to fully develop the character of Judd, declaring, "He understood what he was doing exactly."
According to make-up artist Craig Reardon, cinematographer Robert Caramico directed several scenes due to creative differences between Tobe Hooper and the film's producers.