The script was written with Amitabh Bachchan in mind to play the title role, but he had gone into politics and was not doing films so the role went to Jackie Shroff.
Allah Rakha ended up being the main reason Manmohan Desai and Subhash Ghai's friendship got destroyed. Jackie Shroff was the poor scapegoat in the middle. Manmohan Desai was to distribute the film in Delhi and backed out at the last minute. Ghai felt that Manmohan Desai had taken the film to sabotage it. If he was the distributor he could release the film in limited theaters with minimal publicity. In those days Karma and Allah Rakha was being made at the same time and were going to release together. Many stories were in the press that Ghai would hold Jackie Shroff on the Karma sets so he could delay the making of Allah Rakha . Many stories of Manmohan Desai ill treating Jackie due to Jackie being Subhash Ghai's protegee were also in the media. Manmohan Desai accused Jackie Shroff of telling Ghai about some scenes from Allah Rakha. Subhash Ghai would then use those same scenes for Karma. For the longest time Allah Rakha and Karma were going to release on the same day. Manmohan Desai and Subhash Ghai finally sat down and discussed the release date mess they were in. Subhash Ghai denied all allegations against him saying he respected Desai as a senior and had no issues with him.
One of the reasons the film flopped was the public thought the movie was a Muslim social, due to the title. By the mid 80's Muslim socials no longer worked at the box office.
When the shooting of allah-rakha was going on at r.k.studios, a set of a street was made and some hindi films posters were put on the walls. Then randhir kapoor visited the sets he was looking around, among other films posters he saw posters of r.k.films like mera naam joker & biwi o biwi, when randhir saw that he told ketan desai, why are you advertising r.k.flops, put posters of hit like bobby & ram teri ganga maili, ketan desai stopped shooting and ordered the changes, then the shooting resumed.
The background music during the scene where Jackie Shroff shoots Shammi Kapoor was earlier used in Coolie. The music was used in the climax scene of Coolie.