Norman J. Warren said he turned the film down originally, because the script wasn't terribly good. It was also going back to the old sexploitation days he'd left behind with his earlier films, which he didn't want to do anymore. However, the producer was very determined and said Warren could change the script if he wanted. So he sat down with the writer and said, rather than try and make a sex film, why don't they make it more of a comedy? So that's what they did. Though it did still feature nudity and sex.
The section of spaceship that appears in the park scenes was created with scaffolding covered with plastic sheets. The way in which these scenes were lit was meant as a pastiche of Close Encounters of the Third Kind (1977). The scale model shots of the ship in flight were stock shots taken from Space: 1999 (1975) in which star Barry Stokes guest-starred in an episode. Due to the variety of stock shots used, the appearance of the ship changes over the course of the film.
In the United States, the film was released as Spaced Out by the newly founded Miramax, which re-edited the film to include new voice-overs and music and an upbeat ending. Director Norman J. Warren, who was not consulted on these changes, said the only alteration he "really liked" was the new title, as he had thought the original title, Outer Touch, was "quite negative-sounding."
The film remained unavailable on any home video format until 2008, when the original UK cut (bearing the American title "Spaced Out") was released on DVD by Odeon Entertainment. Prior to its DVD release the film had never been shown on UK television.
In the North American release Bob Saget dubbed the voice of the jukebox. The decision to use him was made by Miramax boss Harvey Weinstein.