The laughter of the Six-Shooter puppet was supplied by Albert Band, father of producer/Full Moon CEO Charles Band. Albert had escaped France during the Nazi regime, which means every time the viewer hears Six-Shooter laughing after he had gunned down a Nazi, that it is the actual voice of a man who had really escaped from them.
Location scenes of Nazi Germany were originally set to be filmed in Romania, but were canceled because of political instability in that country, and Ted Nicolaou, who had finished making Subspecies (1991) there, advised director David DeCoteau to not travel there because of said tensions. The second choice was Hungary, but weather conditions during winter were judged too harsh for filming. Eventually the "location" footage was shot on the back lot at Universal Studios. Retro Puppet Master (1999) would eventually be shot in Romania several years later.
(at around 10 mins) When Toulon says to Tunneler that he is always the first in line for dinner, it is hinting that he was a slave to the Nazi mines when he was a human and was starved to death by them.
Six Shooter was chosen to resemble a cowboy after it was decided that one of Toulon's puppets should represent the opposition towards the Third Reich.
The surgery scene in the opening had to be toned down to make it less intense upon request from producer Charles Band and Paramount Pictures.