Jim Henson's plan with this movie was to get back to the darkness of original Brothers Grimm fairy tales. He felt that children liked the idea of being scared and that this was a healthy emotion for them with which to deal.
Pre-production work revolved around Brian Froud's designs, without a finished script. When Froud originally presented Jim Henson with concept drawings for the crystal, Henson seemed perplexed. When Froud asked why, Henson said he had no idea what the designs were for. Froud had misunderstood Henson during early production conversations; Henson intended to call the movie "The Dark Chrysalis", referring to the Skeksis dominance over the world. Henson loved the concept art, and integrated the idea of the crystal into the storyline.
Early drafts of the script featured Jen and Kira travelling through the underworld, where they encountered a race of underground mining creatures. The concept was later integrated into Fraggle Rock (1983).
At the time it was made, it was hailed as the only live-action movie in which a human character makes no appearance. With the exception of some wide shots of the Gelflings, it would've been the first live-action movie where no human actors appeared.
Jim Henson personally trimmed twenty minutes from this movie after a disastrous preview in San Francisco, California. He also ordered many of the character voices re-dubbed to eliminate some of the invented character languages, making this movie more accessible and the plot easier to follow.