The idea for Monsters, Inc. came out of a 1994 lunch attended by John Lasseter, Pete Docter, Andrew Stanton and Joe Ranft, near the end of Toy Story. Docter wanted to tap into childhood imagination, recalling the monsters he believed lived in his closet. He began work on the film in 1996 under the code name Hidden City, and a 1997 treatment already resembled the final story. The early drafts had a 30-year-old man troubled by childhood monsters, and the lead changed many times, from a boy's counterpart to a girl around three years old. Pixar worried that a main character whose job was scaring children would alienate audiences, so the team made Sulley the star scarer, like a football quarterback. The monster Mike Wazowski was added in a 1998 story summit, and the title itself came from Joe Grant, a Disney animator.

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.