The story of the film was partially adapted from the 1998 Malayalam film Summer in Bethlehem, which was co-written by Ranjith, Sreenivasan and Venu Nagavally and Priyadarshan developed a new screenplay.
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It ran for 200 days and became the third-largest hit of 1998, following Harikrishnans and Summer in Bethlehem.
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Harikrishnans, which featured Mohanlal and Mammootty in their first appearance together for seven years, and Summer in Bethlehem, with Suresh Gopi, Jayaram, Manju Warrier and Mohanlal, were the most eagerly awaited releases, but Punjabi House became a blockbuster in the first week alone, with a gross of more than 4 crores.