The French production company Studio 37 initially searched for an American co-producer, and received positive response from Hollywood representatives who read the screenplay. However, because of cultural differences, they decided to look for European partners instead, as they thought it would be essential for the project to be driven primarily by its director.The film was eventually produced by Studio 37, Onyx Films and the Montreal-based company Transfilm, for a budget of $50 million.
Variety reported from the Cannes Film Market in 2009 that Kirsten Dunst and Emile Hirsch were in talks to play the film's two leading roles. A few months later the same magazine reported that Jim Sturgess had been cast instead of Hirsch.
Principal photography started in Montreal in February 2010.Filming and post-production were located in Canada because of the country's low taxes for film productions. Producer Dimitri Rassam said: "We couldn't have made Upside Down without the French funding system.