Jack Black signed on because he was a big fan of the original The NeverEnding Story (1984). He was so unhappy with how this film turned out that he refused to discuss it in interviews for several years afterward.
Karin Howard's original screenplay had Bastian in Fantasia for most of the storyline, with his new step-sister reading the book and initially trying to sabotage Bastian's story, but eventually starting to help him out. This was later changed to having Bastian spend most of the story in the real world, with the Nasties being the ones who tamper with the book, and his step-sister instead getting her hands on the Auryn and using it for selfish purposes.
Warner Bros. optioned to buy the worldwide distribution rights to the film but passed on it. The studio still released the film in Germany, Britain, and France due to a pre-existing distribution deal with the producers. Miramax took up the North American release. Due to an editing snafu, one audio track has the music from Warner Bros.' Family Entertainment division (complete with Bugs Bunny's carrot chomping) playing over the Miramax logo.
The film barely received a theatrical release in the United States after a test-market run in selected cities pulled in disappointing results.
The only film in the trilogy not to feature the original theme song over the closing credits.