The script is based mainly on the early Teenage Mutant Ninja Turtles comics, including the stories of the turtles' origins, rooftop battle, sojourn to the farmhouse, and battle with Shredder. Elements were taken from the 1980s animated series, such as the Turtles' colored bandanas and love of pizza, elements of Michelangelo's character, and April O'Neil as a television reporter instead of a lab assistant.
The film's budget was $13.5 million. Much of the production took place in North Carolina, with a couple of location shoots in New York City during the summer of 1989 to capture famous landmark areas, such as the World Trade Center, Times Square, the Empire State Building, and the Hudson River. Filming in North Carolina took place at the North Carolina Film Studios, where New York rooftop sets were created. Production designer Roy Forge Smith and his art director, Gary Wissner, went to New York City four months prior to filming and took still photographs of rooftops and other various locations. While in NYC, Smith and Wissner were allowed to explore an abandoned Brooklyn subway line, as they could not gain access to a city sewer, but the structure of the subway had the same principle as a sewer. They also went to a water tunnel which had large pipes running through it.
After design sketches were created, the construction team used the studios' backlot to create some of the sets. There were problems with the manholes that led to the turtles' home, in that an eight-foot square room had to be constructed beneath them, but found water at about five-feet, and thus had to pour concrete into the underground rooms to keep the water out. In order to make the sewer authentic, a tide-mark was given, and it was covered with brick, plaster and stucco paint to give the walls a realistic look.
The turtle costumes were created by Jim Henson's Creature Shop in London. Jim Henson said that the creatures were the most advanced that he had ever worked with. The creatures were first made out of fiberglass, and then remolded out of clay. They were produced as molds to cast the whole body in foam rubber latex. The work at the Creature Shop was completed within 18 weeks.
The costumes used state-of-the-art animatronics to make the face masks expressive. The masks included a set of internal animatronic mouths, eyes and eyebrows which were managed by a technician with the help of a computer. The computer could codify set of expressions, such as anger or awe, which were later programmed into the keys of a joystick handed by the technician. Capture of movement was also used for the lips. The technician could wear a special helmet with cameras recording the lips when pronouncing a phrase, and transferring to the mechanical lips embedded in the masks.
Many major studios, such as Walt Disney Pictures, Columbia Pictures, Universal Pictures, MGM/UA, Orion Pictures, 20th Century Fox, Paramount (whose parent company Viacom would acquire the TMNT property in 2009), and Warner Bros. turned down the film for distribution; they were worried that despite the popularity of the cartoon and the toy line, the film could potentially be a box office disappointment, like Masters of the Universe was just a couple years prior. The film found distribution roughly halfway through the initial production, via the then small and independent production company New Line Cinema, which had been known for distributing low-budget B movies and arthouse fare.
According to Brian Henson, the film was finished in post-production largely without Barron. Editor Sally Menke, who later edited many films by Quentin Tarantino, was removed as production company Golden Harvest did not like her work.