The USS Echo was based on the real-life USS Echo(IX-95), a 40-year-old twin-masted scow (flat-bottomed schooner) that was transferred from the New Zealand government to the US Navy in 1942, and returned to the New Zealand government in 1944.
Columbia Pictures acquired the rights to a story in the July 1956 issue of Argosy titled Big Fella Wash Wash, inspired by reminisces from former Echoskipper Meredith "Rip" Riddle. The story was advertised on the cover of the magazine as "The Wackiest Ship in the Army", because the naval vessel had been under Army command while in port, and Columbia used that title when purchasing the story in 1957. The movie never explained any connection between the ship and the Army, puzzling some viewers. (The later TV series spelled out the link.)
The director and writer of the film was Richard Murphy, who had written the script for the 1951 film You're in the Navy Now. The film was originally developed for Ernie Kovacs in the lead role, with Lemmon as the ensign. But at production time Kovacs was unavailable, and Lemmon was considered too old-looking for an ensign. So Lemmon got the lead role and popular actor/singer Ricky Nelson the supporting role.