The movie is set in Three Oaks, Michigan, where town exteriors were filmed. Filming also occurred at the Old Republic House in New Carlisle, Indiana, La Porte, Indiana, and at Starved Rock State Park in Utica, Illinois.

The real name of the reindeer who played Prancer was Boo.

The poster for this movie appears in the Seinfeld (1989) episode Seinfeld: The Dog (1991).

The main street in the movie is a street over from that in Three Oaks where the lumber yard was located.

The film was originally set to be released by Cineplex Odeon Films, owned by the titular theatre chain, one of the largest in North America. However, due to a regime change, Cineplex Odeon dropped its distribution rights, and it eventually ended up at Orion.

The holiday and reindeer aside, this story bears a strong resemblance to that of Pollyanna (1960).

The film was originally going to be produced by Dino De Laurentiis, but the rights ended up with his daughter Raffaella De Laurentiis, who agreed to make the film for Cineplex Odeon.

Ariana Richards auditioned to play Jessica, but director John D. Hancock had her cast as Carol instead.

The end of the film was supposed to use "Chant of the Hebrew Slaves" from Giuseppe Verdi's "Nabucco," but producer Raffaella De Laurentiis had a working relationship with composer Maurice Jarre that she wanted to continue, and declared to director John D. Hancock that Jarre would compose the ending whether he liked it or not.

Michael Constantine appears in this film as Mr. Stewart/Santa and John Corbett appeared in the sequel Prancer Returns (2001). Both Michael Constantine and John Corbett appeared in My Big Fat Greek Wedding (2002) and My Big Fat Greek Wedding 2 (2016).

Director John D. Hancock insists that Prancer's fate (either he rejoined Santa or leaped off the cliff to his death) should be left open to interpretation, but the studio wanted a more definitive answer. Originally, Hancock decided on an elaborate special-effects sequence showing Prancer's journey to Santa's sleigh but was scrapped in favor of a more simplistic animated sequence. Hancock claims that the shot of Prancer rejoining Santa is all in Jessica's mind.