This film was released in between the episodes " Snow" and " Salty's Secret" between the conclusion of the fifth series and the start of sixth series

According to David Axford, David Mitton had desired to incorporate characters from the TUGS franchise into the film as a tie-in through a scene where Thomas encountered them on a seaside run by. Many of their models were shipped over from the United Kingdom, but none were ultimately used in the film. Template:Ref Thomas and the U.K. Trip | Hello Thomas and James | Thomas and Connie's Wonderful American Journey | Thomas the Tank Engine Movie - All Star Parade Thomas and the Magic Railroad was released onto VHS and DVD on 19 October 2000 in the United Kingdom and Ireland by Warner Home Video and in the United States on October 31, 2000 by Columbia TriStar Home Video. In 2007, the Double Feature with The Adventures of Elmo in Grouchland was released. Principal photography began on 2nd August 1999 and wrapped on 15th October 1999. Filming took place at the Strasburg Rail Road in Strasburg, Pennsylvania, United States, as well as in Toronto, Ontario, Canada and on the Isle of Man. The Castletown railway station on the Isle of Man Railway formed part of Shining Time Station and the goods shed at Port St. Mary railway station became Burnett Stone's workshop. The large passenger station where Lily boards the train is the Harrisburg Transportation Center. Strasburg Rail Road's (ex Norfolk & Western) 4-8-0 475 was repainted as the Rainbow Sun. The Thomas model used for advertising the Fix 'em Up Friends set is different than the model from the set.

Thomas, Lady and Burnett return, where they and the rest of the team work out the answer to the riddle. Lily mixes water from the well with golden shavings from the magic railroad and with a little encouragement, tosses them into the air, where they form into gold dust. Delighted, the conductors resupply their whistles, while Thomas and Lady thank each other. Stefano, Flying Scotsman, and Beresford were all released in multiple sections rather than as one piece. This is because they are too large to fit into a single gashapon capsule. After Diesel 10 and P.T. Boomer fall into the barge, they would have either vanished or would have been turned into boiler sludge via Junior's magic bandanna, who arrived at the Big Dipper by Percy. This movie takes place between fifth and sixth series of Thomas & Friends, and after the cancellation of Shining Time Station. The next morning, Mutt goes to Lily's hometown with Billy, as he knows that Lily can help Mr. Conductor, but only if she meets someone special at Shining Time first. To reach that end, he directs her onto the wrong train, placing her on the train bound for Shining Time instead of the train to Muffle Mountain. Meanwhile, Burnett Stone hears the sound of Lady's magic echoing through the mountain.

In a 2007 interview, Britt Allcroft commented that the finished film was drastically different from the version she had written, with several scenes, plot elements and characters being cut from the final film. After the chase scene when Lily gives gold dust to Mr. Conductor and Junior, part of the green screen effect on Mr. Conductor's left elbow can be seen. During the chase scene, Burnett says to Diesel 10 "No, you won't, because the magic you refused to believe in, will get the better of you." However, Diesel 10 did believe in the magic as that was the whole reason as to why he wanted to destroy Lady. This is because the line was originally intended to be directed at P.T. Boomer, but when he was cut from the film, the line was edited to omit any mention of him.Mutt the dog was portrayed by British golden-doodles, Bently and Dita. When in action, trainers stood off camera and gave verbal cues to get the dogs to sit, lay down, stand and stay. When Mutt is shown running through the crowded train station, one trainer doubled as an actor while the other stood off camera and held up a treat that Dita ran towards. The trainers put Mutt into the train so he sat and rode with the actors. In several scenes we see close up shots of Mutt’s face reacting to something. These were all taken in one day, with a trainer holding up Bentley’s favorite toy. Originally, Sir Topham Hatt was to be casted in a live-action appearance but this was eventually dropped because no actor "of the right size" could be found. Also as he's hanging, when he yells "Puffball!", he has his worried face, but it suddenly goes to his evil smile face when he shouts "Teapot!".

When 'Bertie, Terence, and Cranky Edition' was first released, Bill and Ben had yellow wheels. When the wave was rereleased they gained siderods, which were soon removed when 'Buzz Buzz James edition' was released. This episode marks Toby's only speaking role in the seventh series, which makes the seventh series the first series of the show to have Toby only have a speaking role once, the others being the seventeenth series episode, The Lost Puff and the twenty-third series episode, Heart of Gold, and this also marks his last speaking role in the Classic Series. The windmill being adjacent to Thomas' Branch Line before Crowe's Farm Crossing in the second series episode Ghost Train. All of these changes were featured in the original script of the film. They were cut out in either later scripts or the final release: Some of the engines share the same whistle sound (which is Thomas' whistle in the special but at different pitches); Gordon and James both use the same whistle, as do Henry and Percy.Mr. Conductor and Lily camp out with Thomas. Mr. Conductor tries to keep Lily entertained, but she is worried about being late as her grandfather told her to return by sunset. After a conversation, they realise that Burnett may hold the key to the clue of the gold dust. The windmill being in a field along the Headland Line near Lower Tidmouth in the third series episode Time for Trouble. On 10 Years of Thomas the Tank Engine & Friends, the whistle sound used by George Carlin's Mr. Conductor during the second and third seasons of Shining Time Station is heard at the start of each episode.

Additionally, James' prototype incorrectly portrayed him as an 0-6-2 and his tender had a removable coal load, like the Motorized Interactive Talking James from the original series. The only production of Thomas' first movie not to have a music composed by Mike O'Donnell and Junior Campbell although the movie was composed by Hummie Mann worked on scores & songs for the film. The ruined Tower Mill was originally going to appear in the aftermath of the storm in the 2005 special, Calling All Engines! but it was changed to the Sodor Suspension Bridge.There is something on Muffle Mountain, a secret that Burnett only shared with his childhood friend and future wife Tasha: he promised he would drive an engine and take her with him. When Patch sees the engine, Burnett reveals the engine's past - her name is Lady since she was sealed inside Muffle Mountain since Diesel 10 crashed and nearly destroyed her long ago. Burnett has fixed her up, but informs Patch that she still needs coal to fully run again. Unfortunately, Lady requires special coal to build up steam, which he has not found yet. Big Man is the same as Little Man, except with Mr. Conductor at human size. Mr. Conductor was green-screened in both tests. In a close-up of Percy finding Splatter and Dodge at the magic buffers, his lamp mysteriously moves.