According to Martin Sahlin, the game's landscape are inspired by the city of Umeå, Sweden: "It's a very small town, very far north, close to the Arctic circle. There's not a lot of people, but a whole lot of countryside. I think you don't really see enough of that in video games."
According to Martin Sahlin, the yarn that makes up Yarny represents love, and the character unravels as they travel away from what they love.
Director/writer Martin Sahlin came up with the idea for the game after creating a Yarny doll out of tire wire and yarn during a family camping trip in northern Sweden.