The setting, Bagdad, California, is a former town on the National Trails Highway (U.S. Route 66). After being bypassed by Interstate 40 in 1973, it was abandoned and eventually razed. While the town had a "Bagdad Cafe," the film was shot at the then Sidewinder Cafe in Newberry Springs, 50 miles west of the site of Bagdad. The cafe has become something of a tourist destination; to capitalize on the film, it changed its name to Bagdad Cafe. A small notice board on the cafe wall features snapshots of the film's cast and crew. In 2015, the motel was torn down and the trailer was removed from the property.
According to CCH Pounder, Jack Palance refused to do a romantic scene with Marianne Sägebrecht because he found her unattractive. The scene was shot with each actor at separate times and edited together.
Bagdad Cafe (1987) was shot in sequence in order to accommodate Marianne Sägebrecht who did not speak much English.
The shadow of the camera crew is (deliberately) visible while the credits for the cinematographer are on the screen.
The desert light phenomenon witnessed by Jasmine and appearing on the painting in her room is a sundog or parhelia. The sunlight is refracted usually on the horizon by ice crystals in the atmosphere.