When Amol Palekar narrated the script to Shahrukh Khan, the first question he was asked was if his company Red Chillies could produce the film. The second question was if Palekar could give him a part in the film, no matter how small it was. He got the dual role of Kishen and the Ghost.
This movie was selected to be India's official entry to the Oscars over Swades (2004) and Black (2005).
The Rajasthan desert in the film was originally to have been CGI, which would have made this the first Hindi film with a CGI background, but it was too expensive, so an artificial desert was created.
The film was shot in 47 days.
According to Khan, Paheli is a woman's liberation film that deals with the issues of marriage and asks whether a woman must stay with a man only due to marriage and not out of love.