After the success of Easy Rider (1969), Universal Studios created a youth division, making "semi-independent" films for low budgets in hopes of generating similar profits. The idea was to make five movies at $1 million or less, not interfere in the filmmaking process, and give the directors total control and a share in the profits.
Dennis Hopper came back from shooting in Peru with more than 40 hours worth of footage. His final cut, after more than a year of editing, was incomprehensible to many people at the studio, because of its experimental nature. The long post-production and editing process is documented in The American Dreamer (1971).
While editing the film in New Mexico, Dennis Hopper gave director Alejandro Jodorowsky, who just had a cult success with his surreal cult feature El Topo (1970), the chance to create a more experimental edit of his film. He did, but Hopper later rejected it and created his own final version. Hopper still acknowledged the artistic influence of Jodorowsky on the final version.
Dennis Hopper played the lead role himself, because "It was easier doing it myself than explain to another actor what I wanted."
The main premise of the film - indigenous natives enacting a movie-making ritual - is based on Dennis Hopper's experiences while filming The Sons of Katie Elder (1965) in Mexico, in which he observed the locals doing the same thing. Hopper originally wanted to shoot in Mexico, too, but the production was finally moved to Chinchero, Peru.