The reason for the film's $70 million production budget, despite being set in one location, was because the apartment complex and the pool were built for the film. Some of this film was shot in Levittown, Pennsylvania at a Jacobson logistics warehouse site (director M. Night Shyamalan had committed to using filming locations in Pennsylvania). The set, built on the warehouse site, includes the apartment complex and a half city block of row houses. Occasional footage was shot inside the overflow area of the warehouse. Most of the filming was completed after Jacobson work hours.
Director M. Night Shyamalan adapted Lady in the Water, originally a bedtime story, into an actual children's book. It was released on the same day as this film.
Director M. Night Shyamalan, delighted after he discovered the unknown Cindy Cheung, was shocked to hear that her agent demanded $1 million for her role in this film. Night was prepared to pay the SAG minimum, $65,000. They settled at $100,000.
Contrary to popular belief, the creatures in this film are not based on any mythological creatures, and were all invented by director M. Night Shyamalan. The only creature to be based off of an existing illustration is the Narf, which is inspired by water sprites, nymphs, and water-fairies.
M. Night Shyamalan: [Pennsylvania] Shyamalan demanded that the set be within 45 minutes of his Pennsylvania home. He timed the trip which took 43 minutes.
M. Night Shyamalan: [self] Acting in his movies. His character, "Vick Ran," is a reference to Vikram Seth, an Indian author.