The film takes place in the fictional town of Fly Creek, Georgia, which becomes infested with carnivorous worms after an electrical storm.

Lieberman's script is based on a childhood incident in which his brother fed electricity into a patch of earth, causing earthworms to rise to the surface.

After American International Pictures picked up Squirm for distribution, it was edited to remove the most graphic scenes in an unsuccessful attempt to lower its "R" rating to "PG".

The next morning, Geri Sanders borrows a truck from her neighbor, worm farmer Roger Grimes, to pick up her boyfriend Mick, who is arriving from New York City for a vacation.

He orders an egg cream and finds a worm in it, though the owner and Sheriff Jim Reston believe he placed it there himself as a prank.

Geri introduces Mick to her mother Naomi and sister Alma, before they both leave to browse at antique dealer Aaron Beardsley's house.

Mick realizes electricity is still being released from the power lines and that the wet soil is acting as a conductor; he hypothesizes the worms only come out at night.

[3] He was also inspired by a news story from Floyds Knobs, Indiana, about migrating millipedes invading homes[4] and by the 1963 film The Birds.

Sheen had suggested that Mick should be an actor and had wanted him to recite the Yorick scene from Hamlet when he discovers Aaron Beardsley's skull.

[5] Half of the worms used in the film were made of rubber; the others included large sandworms from Maine, refrigerated and transported to Port Wentworth,[3] and an estimated 3 million bloodworms provided by the University of Georgia Oceanographic Institute.

The local Boy Scouts troop was hired to move the canvas from below to make the worms undulate; they received merit badges for their work.

Bernard Herrmann, composer for The Day the Earth Stood Still (1951) and Psycho (1960), was originally slated to write the score but died before beginning work.

The fake worms were drawn through Dow's skin using monofilament fishing line covered in lubricant, pulled from just out of shot.

It was acquired by American International Pictures (AIP), who released it theatrically in the United States on July 14, 1976, and worldwide on August 9 that same year.

The DVD version, with a 93-minute run time, restored the shower scene and included an audio commentary with Lieberman as part of the special features.

[22] In his 2019 book American International Pictures, Rob Craig agreed that the movie's horror was made effective by Baker's gory make-up.

[19] Craig was also impressed that the film managed to convey a "sense of dread" with the use of a traditionally non-threatening creature like the earthworm, by "amassing [them] into a gigantic horde which becomes a mass-minded killing force".

[19] Another retrospective reviewer, in the 2013 edition of Leonard Maltin's Movie Guide, assessed the film as an "above-average horror outing [that] builds to good shock sequences".

[20] The cinematography was praised by critics;[18][26] John Kenneth Muir commended the filmmaking along with the film's imagery, though he found the inconsistent tone and lack of believable characters "a letdown".

[25] Guarisco described Squirm as an "excellent example of the 'revenge of nature' horror" genre, and praised its third act for getting viewers invested in the fate of the characters.

[18] The film received generally positive retrospective evaluations, earning it cult classic status[14][15][28] and recognition for its humor and themes;[16][28] Time listed Squirm as one of the best "Killer-Animal Movies" in 2010, noting its "sick twist" on the shower scene in Psycho.

[28] A TV Guide contributor gave positive marks to its handling of the tongue-in-cheek humor and scares, including the tribute to Psycho.

Hunter argues that Jaws "merely served to perpetuate the early-1970s genre Quentin Tarantino called the 'Mother Nature goes ape-shit kind of movie'".

[31] Muir describes the genre as "eco-horror", commenting that "these films reflected genuine audience trepidation that Mother Nature would not stand for Man's continued pillaging and pollution of the Earth".

[33] Rob Craig also commented on the sexual undercurrents in the film, arguing that in the context of the film's treatment of rural folk as "ignorant, divisive, reactionary, corrupt, and quite possibly lunatic", the worms can be seen as a metaphor for "a country bumpkin's slimy, limp penis: a laughably vulnerable object by itself, but fearsomely dangerous in aggregate", which in turn implies the rural men are "a gaggle of 'limp noodles' which are nonetheless dangerous as a societal force".

Counts notes similarities between the themes of "masculine ideals" in Squirm and Straw Dogs, in which the male leads are heroes, and also said the film does not give the impression Don Scardino's character grew into a "man" after his experience.

[21] Lieberman wrote the foreword for Jon Towlson's 2014 book Subversive Horror Cinema: Countercultural Messages of Films from Frankenstein to the Present.

This could all very well be true, but if it is, it was not done purposely on my part.Director Brian De Palma included a poster of Squirm in several scenes of his 1981 film Blow Out.