George Lucas wanted to make an escapist space opera inspired by Flash Gordon serials and the planetary romances of Edgar Rice Burroughs, in reaction to the dark, dystopian science fiction of the early 1970s. His early drafts borrowed plot beats from Akira Kurosawa's The Hidden Fortress and featured invented names that later appeared in the sequels. United Artists, Universal, Walt Disney Productions and the Directors Company all declined the project. Twentieth Century Fox offered a deal in July 1973 that gave Lucas $150,000 to write and direct the film and 40 percent of the profits. Lucas gained merchandising and sequel rights because American Graffiti had been a major hit that August.

Hampi is a UNESCO World Heritage Site in Karnataka, India, with more than 1,600 surviving remains spread over 4,100 hectares. It was the capital of the Vijayanagara Empire from 1336 to 1565. Travellers from Persia and Portugal described it as a prosperous, wealthy and grand city with temples, markets and farms along the Tungabhadra River. By 1500 it was estimated to be the world's second-largest city after Beijing, and probably India's richest at the time. In 1565 a coalition of Muslim sultanates defeated the Vijayanagara Empire, its capital was conquered and destroyed, and the city was left in ruins. Hampi remains a religious centre, with the active Virupaksha Temple at its heart.