There were many rumors about why Catherine Hicks didn't reprise her role as Karen Barclay in the sequel with the popular being that she was pregnant by husband Kevin Yagher who operated the animatronic Chucky doll, but the simple fact was that the director John Lafia wanted to take the story in a new direction. A direction that didn't include her character aside from a unfilmed opening courtroom scene that had her be sent to a mental institution. Despite not reprising her role, she was constantly on set for the sequel to visit her husband.
The original script had an opening scene of a court hearing dealing with the events of the previous film with Karen Barclay and Mike Norris defending Andy, while the remains of Chucky's burned body are stored in a evidence locker before being taken by the executives of the Play Pals company to rebuild it. Catherine Hicks was to reprise her role of Karen Barclay in this sequence but it was cut before filming began. Elements of this scene appeared in a similar courtroom scene in Curse of Chucky (2013) and the evidence locker opening was retooled in Bride of Chucky (1998).
The Good Guy doll Tommy is named after original Child's Play director Tom Holland.
The director, John Lafia felt that the movie should primarily be shot from a child's perspective, and more specifically from Andy and Chucky's perspectives. To achieve this effect, Lafia employs very wide lenses, very low angles, bright colors and a deep depth of field, as he felt this was how the world looked to a child. Many have praised the childlike look of the film as being its most effective quality over the years.
Don Mancini stated that in an early draft of his script, the film was set during the Christmas season. This would have explained why so many Good Guy dolls were in the factory during the finale.