Due to the success of F.W. Murnau's previous film, The Last Laugh (1924), the studio promised him an unlimited budget with which to make this film.
Until Metropolis debuted a year later, this was the most expensive German film.
After the film had already been shot and edited, UFA decided it disliked Hans Kyser's script. Over Kyser's objections, it asked German writer Gerhart Hauptmann to work on it. However, the studio decided that it disliked Hauptmann's script even more. The film was released in Kyser's original version.
Director F.W. Murnau wanted Lillian Gish to play Gretchen, but she insisted that the film be shot by her favorite cinematographer, Charles Rosher. Murnau instead cast newcomer Camilla Horn, who he had met on the set of Tartuffe (1925), where she was a double for Lil Dagover.