Filmed in Lawrence, Kansas, and Salt Lake City, Carnival of Souls was shot on a budget of $33,000, and Harvey employed various guerrilla filmmaking techniques to finish the production.

The film is loosely based on the French short An Occurrence at Owl Creek Bridge (1961), an adaptation of the 1890 story of the same name by Ambrose Bierce, and Harvey was inspired by the visual style of filmmakers such as Ingmar Bergman and Jean Cocteau.

While driving near an abandoned pavilion on the shores of the Great Salt Lake, Mary begins experiencing visions of a ghoulish, pale-faced figure (referred to as "The Man" in the credits).

Harvey was a director and producer of industrial and educational films based in Lawrence, Kansas, where he worked for the Centron Corporation.

[7] While returning to Kansas after shooting a Centron film in California, Harvey developed the idea for Carnival of Souls after driving past the abandoned Saltair Pavilion in Salt Lake City.

[8] "When I got back to Lawrence, I asked my friend and co-worker at Centron Films, John Clifford, who was a writer there, how he'd like to write a feature," Harvey recalled.

"[9] The screenplay is loosely based on the French short film An Occurrence at Owl Creek Bridge (1961), an adaptation of the 1890 story of the same name by Ambrose Bierce.

[5] In New York City, Harvey discovered then-twenty six year-old actress Candace Hilligoss, who had trained with Lee Strasberg, and cast her in the lead role of Mary Henry.

[8] There was not enough money for a process screen to create a rear projection effect, which was the method typically used at that time to create the impression that a scene was taking place inside a moving car, by combining footage shot inside a static car with separate footage of a moving background.

[8] Instead, Harvey used a battery-powered hand-held Arriflex camera to film the shots inside moving cars, removing the need for compositing.

The Arriflex, which was at that time more often used by cameramen filming newsreel footage, also allowed them to use a moving camera in other scenes without the need for gear like dollies or cranes.

At this time, Badiyi had been second-unit director on one other film, Robert Altman's directing debut, The Delinquents,[17] but would go on to make (amongst other notable work) some of the best-known, iconic television series openings and montages, including Hawaii Five-O, Get Smart, and The Mary Tyler Moore Show.

[19] Carnival of Souls features an original organ score by local Kansas City organist and composer Gene Moore.

However, the 16 mm television copies were printed complete and individually cut by each station to fit their time slot, which is why they vary in length.

"[2] Carnival of Souls went largely unnoticed by critics upon its initial release and received "delayed acclaim" in the ensuing decades,[9] with numerous arthouse screenings in 1989 in conjunction with the Halloween season.

"[31] Leonard Maltin gave Carnival of Souls a score of two-and-a-half out of four stars, calling the film an "eerie" and "imaginative low budget effort.

"[32] Critic Roger Ebert likened the film to a "lost episode of The Twilight Zone," and noted that it possessed an "intriguing power.

"[28] Joe Brown of The Washington Post remarked upon the film's cinematography, writing: "Harvey's camerawork gives a new twist to the word 'deadpan,' making the most mundane places and people imaginable seem like ghastly hallucinations, and the director shows a flair for elegantly employing existing locations and lighting for maximum disorientation value.

"[33] Stephen Holden of The New York Times saw the 1989 screening at the Fantasy Festival and wrote: "What has earned Carnival of Souls its reputation is the director's knack for building a mood of fatalistic angst.

"[34] The Los Angeles Times' Peter Rainer perceived the film's cinematography to be inconsistent in merit, called the acting "fairly amateurish to begin with, [and] has a one-take-only quality", and noted the "inept post-dubbing"; however, he wrote that "these rinky-dink elements only add to the horror.

The site's consensus states that the film "offers delightfully chilling proof that when it comes to telling an effective horror story, less can often be much, much more".

The film, including the original negative and a handful of surviving prints and outtakes were purchased from the filmmakers, along with all rights, by Peter Soby and Matthew Irvine of Chicago West Entertainment in January 1997.

The film has been named as a precursor to the works of various filmmakers, including David Lynch,[48] George A. Romero,[49] Lucrecia Martel[50] and James Wan.

[54] A novelization of the film titled Nightmare Pavilion written by Andrew J. Rausch was released by Happy Cloud Media in October 2020.

[55] There has yet to be a true remake of the original, however Peter Soby negotiated "based on" rights of Carnival of Souls with the writer, John Clifford, and the director Herk Harvey which led in 1998 to a "based on" film entitled 'Wes Craven Presents Carnival of Souls" directed by Adam Grossman and Anthony Hickox and starring Bobbie Phillips.

It was centered on her character from the original film, Mary Henry, coming back as a ghost 35 years later and falling in love with a younger man.