[2] It stars Rick Hearst in his debut acting role as Brian, a young man who becomes acquainted with a talking parasite known as Aylmer (voiced by John Zacherle) that injects him with an addictive fluid that causes euphoric hallucinations; in return, Aylmer demands that Brian allow him to feed on the brains of other humans.

While under the influence of the "juice", Brian is incoherent and unaware of the world around him, allowing the parasite to kill and devour the brains of a night watchman in a junkyard, as well as a young woman at a nightclub.

He is confronted in a courtyard outside his apartment building by his neighbor Morris, the previous owner of the parasite who dubbed it "The Aylmer",[a] and who states that it has changed hands hundreds of times across the globe since the Middle Ages.

In a 1988 interview with Henenlotter, Robert "Bob" Martin of Fangoria referred to the imagery of Aylmer's needle entering the back of Brian's neck as being invocative of drug abuse.

[15] Henenlotter rejected the notion that Brain Damage could be reasonably viewed as pro-drug in nature, stating, "If I planned to portray drugs as pleasurable, Brian wouldn't have lost everything that had meaning to him: his girlfriend, his life, all of it.

"[16] Ahead of the film's release in Australia, Neil Jillett of The Age argued, "Brain Damage can be interpreted as an allegory about drug abuse, with the monster Aylmer standing in for heroin and Brian as an addict.

"[17] In 2017, journalist Michael Gingold wrote of the film that, "Appearing in the midst of the 'Just Say No' anti-drug campaign initiated by First Lady Nancy Reagan, the portrait of young man trying to kick a parasitical habit [...] was especially trenchant.

As well as invoking drug abuse, Martin viewed Aylmer's needle entering Brian's neck as "a pretty grim, anti-sexual image".

[14] However, Henenlotter did acknowledge a sexual undertone to the film, adding:[14] One of the guys at the lab was saying, "Oh my God, you're making some kind of weird statement here—you've got a monster that looks phallic, talking about his juice!"

[19] In 2003, author Scott Aaron Stine noted Aylmer's design as being "a bit phallic", writing, "do I sense someone making a statement about male sexuality?

"[20] In 2017, academic Lorna Piatti-Farnell listed Brain Damage as being among a number of films released in the 1980s which highlight "a disturbing fascination with parasitic creatures and aliens crawling in and out of human mouths, leaving not only a disturbing sense of discomfort in the viewing audience, but also a good dose of raised highbrows and open mouths, as far as latent meaning of oral interactions are concerned".

[22] Specifically, she writes that "the mouth lies at the center of a broader alien plot" in Brain Damage, in that Aylmer "uses ingestion [...] to gain control over its victims.

"[23] In 2022, Henry Giardina of Into wrote that the film contains elements of homoerotic subtext and serves as an allegory for the transmasculine experience, citing Aylmer's phallic design and Brian waking up to find himself covered in blood (which Giardina likens to menstruation), as well as comparing Aylmer's "juice" to both semen and hormone replacement therapy (HRT).

[24] Initial plans by the New Jersey–based company Rugged Films—who had temporarily owned the distribution rights to Henenlotter's debut feature film Basket Case (1982)—to finance Brain Damage did not come to fruition.

[26] After deciding to have Aylmer's voice be "very sophisticated-sounding, articulate", Henenlotter contacted a vocal agent who offered a list of actors that might suit the part.

[25] As Brain Damage was a non-SAG production, Zacherle went uncredited for his voice role, in order to avoid fines or expulsion from SAG.

[29] Hearst later called this "the funniest choice that I think Frank made for me," stating that Henenlotter felt that he "needed to have that as part of the character, otherwise I'd look too pretty.

[26] The primary location for the shoot was a building on West 33rd Street in Manhattan that had formerly housed belt manufacturing and sign painting businesses.

[39] Al Magliochetti, who would serve as stop-motion animator and optical effects artist on Brain Damage,[40] received the screenplay for the film from Henenlotter, and lent it to Bartalos.

[46] For the scene in which Aylmer kills the junkyard watchman, Bartalos built a "half-creature" that was attached to prosthetics on actor Bradlee Rhodes's head.

[56] The shot of light beams shining out of Brian's bedroom window in the final scene of the film was accomplished using a miniature brick façade of a side of the apartment building, fashioned together by Magliochetti with parts from a dollhouse supply store affixed to a plank of wood.

[58] James Kwei, who had invested money in Basket Case's production and worked nights at the Film Center Building, served as an editor on Brain Damage.

[59] The first cut of Brain Damage was around 66 minutes in length, which led Henenlotter and Kwei to adjust the pacing in order to extend its running time.

[72] Joe Kane, writing for the New York Daily News, called Brain Damage "one of the year's more original fright exercises, blending visceral shocks with twisted black humor and low-budget psychedelic tableaux to rival the old Joshua Light Show.

"[73] The Los Angeles Times' Leonard Klady referred to the film as "a veritable crazy quilt of ideas that manages to engage our attention while our heads continue to dart away from the shocking images on screen".

[15] John Brooker of the Cheshunt and Waltham Mercury called the film "a charming little chiller", and "a compelling mix of wacky humour and gory special effects".

[74] The New York Times' Walter Goodman called Brain Damage a "brainless movie", criticizing the acting and special effects.

[61] Lou Cedrone of The Baltimore Evening Sun wrote, "The producers did try to be funny, but their film is more revolting than it is amusing", and concluded that, "At heart, it is little more than a meaningless exercise in slime.

"[75] The Age's Neil Jillett called it "a comedy in somewhat poor taste", and wrote, "While Brain Damage is not advocatory [of drug abuse], its message is hardly helpful to the anti-drug campaign.