Development of Inside Out was green-lit in October 2009 after director Pete Docter noticed his daughter Elie becoming "more quiet and reserved", and began to wonder what was happening internally. Docter invited Ronnie del Carmen, who had worked as story supervisor on Finding Nemo (2003) and Up (2009), to join the project as co-director, a role del Carmen accepted. They sought inspiration from their own personal histories and experiences, and conferred with psychologists and specialists such as psychologist Paul Ekman and Dacher Keltner, professor of psychology at the University of California, Berkeley, for accuracy. While designing Riley's mental landscape, they consulted neuroscientists, and took cues from DNA strands and photographs of neuronal flashes. According to Keltner and Ekman, the film emphasizes the ways emotions organize our thoughts and social lives, especially the role of sadness in fostering connections.

Animation of Inside Out took a year and a half. About 48 animators, including supervisors Shawn Krause and Navone, and director Jamie Roe and 350 artists—35 of them lighting–led by cinematographer Kim White–and 10 layout—and technicians were involved in the production. Two animation teams were assembled: one for the abstract sequence and another involving crowd simulation for the character groupings.

Twenty-seven emotions—including irritation, envy, greed, gloom, despair, depression, love, schadenfreude, ennui, shame, embarrassment, and hope—were considered for early versions of the film, but the number was later reduced for the sake of simplicity. Ekman supplied a list of emotions—anger, fear, sadness, disgust, contempt, surprise, and happiness—and Docter decided to remove surprise due to its similarity to fear; he also removed contempt. Happiness was renamed Optimism and later Joy. Chief Creative Officer John Lasseter offered little input to the film due to his focus on restructuring Walt Disney Animation Studios; it was the first Pixar film to be produced without involvement from the studio's co-founder Steve Jobs, who died in 2011. The film's development process took five-and-a-half years and had a budget of approximately $175 million. Ralph Eggleston, Pixar's production designer since 1992, stated it was the hardest and longest film he had ever worked on. As a result, first-time directors were considered ineligible to work on the film.