Lynch was originally going to produce the film but after reading Gifford's book decided to also write and direct the film version. The filmmaker did not like the ending of the novel and decided to change it in order to stay true to his vision of the main characters. Wild at Heart is a road movie and includes bizarre, almost supernatural events and off-kilter violence with sometimes overtly heavy allusions to The Wizard of Oz and strong references to Elvis Presley and his movies that found their way into screenplay as Lynch was writing it.
Early test screenings for Wild at Heart did not go well; Lynch estimated that 80 people walked out of the first test screening and 100 in the next. The film received mixed to negative critical reviews and was a moderate success at the United States box office, grossing USD $14 million, above its $10 million budget. The film won the Palme d'Or at the 1990 Cannes Film Festival, which received both negative and positive attention by the audience. Diane Ladd was nominated for Best Supporting Actress for both the Academy Awards and the Golden Globes.
Unaware of all of the events happening back in South Carolina, the two are on their way until – according to Lula – they witness a bad omen: the aftermath of a two-car accident, and the only survivor, a young woman (Sherilyn Fenn), dies in front of them. With little money left, Sailor heads for Big Tuna, Texas, where he contacts "an old friend" who might be able to help them. Inevitably, while Sailor agrees to join up with Bobby Peru (Willem Dafoe) in a bank robbery, Lula waits for him in the hotel room, being sick and pining for the better times. Bobby is let into the room by Lula while Sailor is out and tries to rape Lula, but at the last second laughs it off and walks out. The day of the robbery arrives. It goes spectacularly wrong when Peru unnecessarily shoots two clerks, and as they leave the bank, Sailor realized he has been given an unloaded pistol. Bobby then admits to Sailor he's been hired to kill him, but just as he is about to do so he is shot by sheriff's deputies and as he falls he accidentally blows his own head off with the shotgun he was carrying. Sailor is arrested and given five years in jail.
While Sailor is in jail, Lula has his child, her mother "vanishes", and upon his release she decides to pick him up with their son. As they pick him up in the car, he reveals he's leaving them both, deciding while in prison that he isn't good enough for them. While he is walking a short distance away, he encounters a gang of mostly Asian men who surround him. He thinks his bravado will carry him through, but gets jumped, beaten and is knocked out. While he is unconscious, he sees a revelation in the form of an "angelic vision", a woman (Sheryl Lee) who tells him, "Don't turn away from love, Sailor". When he awakes, he apologizes to the men and tells them he realizes a great many things, then screams her name and runs away. As there is a traffic jam on the road, he begins to run over the roofs and hoods of the cars to get back to Lula and their child in the car, with the film ending as Sailor sings "Love Me Tender" to Lula on the hood of their car as the credits roll.
In the summer of 1989, Lynch had finished up the pilot episode for the successful Twin Peaks television series and tried to rescue two of his projects — Ronnie Rocket and One Saliva Bubble — both involved in contractual complications as a result of Dino De Laurentiis' bankruptcy, which had been bought by Carolco Pictures. Lynch stated, "I've had a bad time with obstacles . . . It wasn't Dino's fault, but when his company went down the tubes, I got swallowed up in that". Independent production company Propaganda Films commissioned Lynch to develop an updated noir screenplay based on a 1940s crime novel while Monty Montgomery, a friend of Lynch's and an associate producer on Twin Peaks, asked novelist Barry Gifford what he was working on. Gifford happened to be writing the manuscript for Wild at Heart: The Story of Sailor and Lula but still had two more chapters to write. He let Montgomery read it while the producer was working on the Pilot episode for Twin Peaks in pre-published galley form. Montgomery read it and two days later called Gifford and told him that he wanted to make a film of it. Two days afterwards, Montgomery gave Lynch Gifford’s book while he was editing the Pilot, asking him if he would executive produce a film adaptation that he would direct. Lynch remembers telling him, "That’s great Monty, but what if I read it and fall in love with it and want to do it myself?" Montgomery did not think that Lynch would like the book because he did not think it was his "kind of thing". Lynch loved the book and called Gifford soon afterwards, asking him if he could make a film of it. Lynch remembers, "It was just exactly the right thing at the right time. The book and the violence in America merged in my mind and many different things happened". Lynch was drawn to what he saw as "a really modern romance in a violent world – a picture about finding love in hell", and was also attracted to "a certain amount of fear in the picture, as well as things to dream about. So it seems truthful in some way".
Lynch got approval from Propaganda to switch projects, however, production was scheduled to begin two months after the rights had been purchased, forcing the director to work fast. He had Cage and Dern read Gifford's book and wrote a draft in a week. By Lynch's own admission, his first draft was "depressing and pretty much devoid of happiness, and no one wanted to make it". Lynch did not like the ending in Gifford’s book where Sailor and Lula split up for good. For Lynch, "it honestly didn’t seem real, considering the way they felt about each other. It didn’t seem one bit real! It had a certain coolness, but I couldn’t see it". It was at this point that the director's love of the Wizard of Oz began to influence the script he was writing and he included a reference to the "yellow brick road". Lynch remembers, "It was an awful tough world and there was something about Sailor being a rebel. But a rebel with a dream of the Wizard of Oz is kinda like a beautiful thing". Samuel Goldwyn, Jr. read an early draft of the screenplay and did not like Gifford’s ending either, so Lynch changed it. However, the director was worried that this change made the film too commercial, "much more commercial to make a happy ending yet, if I had not changed it, so that people wouldn’t say I was trying to be commercial, I would have been untrue to what the material was saying".
Lynch also added new characters, like Cousin Dell, Mr. Reindeer, and Sherilyn Fenn as the victim of a car accident. During rehearsals, Lynch began talking about Elvis Presley and Marilyn Monroe with Cage and Dern. The director acquired a copy of Elvis' Golden Hits and after listening to it, called Cage and told him that he had to sing two songs, "Love Me" and "Love Me Tender". The actor agreed and recorded them so that he could lip-synch to them on the set. At one point, Cage called Lynch and asked if he could wear a snakeskin jacket in the film and Lynch incorporated it into his script. Before filming started, Dern suggested that she and Cage go on a weekend road trip to Las Vegas in order to bond and get a handle on their characters. Dern remembers, "We agreed that Sailor and Lula needed to be one person, one character, and we would each share it. I got the sexual, wild, Marilyn, gum-chewing fantasy, female side; Nick’s got the snakeskin, Elvis, raw, combustible, masculine side". Within four months, Lynch began filming on August 9, 1989 in both Los Angeles (including the San Fernando Valley) and New Orleans with a relatively modest budget of $10 million. Originally, the film featured more explicit erotic scenes between Sailor and Lula. In one, she has an orgasm while relating to Sailor a dream she had of being ripped open by a wild animal. Another deleted scene had Lula lowering herself onto Sailor's face saying, "Take a bite out of Lula".
The film was completed one day before it debuted at the 1990 Cannes Film Festival in the 2,400-seat Grand Auditorium. After the screening, it received "wild cheering" from the audience. When Jury President Bernardo Bertolucci announced Wild at Heart as the Palme d'Or winner at the awards ceremony, the boos almost drowned out the cheers with film critic Roger Ebert leading the vocal detractors. Barry Gifford remembers that there was a prevailing mood that the media was hoping Lynch would fail. "All kinds of journalists were trying to cause controversy and have me say something like ‘This is nothing like the book’ or ‘He ruined my book.’ I think everybody from Time magazine to What’s On In London was disappointed when I said ‘This is fantastic. This is wonderful. It’s like a big, dark, musical comedy’". The MPAA told Lynch that the version of Wild at Heart screened at Cannes would receive an X rating in North America unless cuts were made, as the NC-17 was not in effect in 1990, at the time of the film's release. The director was contractually obligated to deliver an R-rated film. He made one change in the scene where a character shoots his own head off with a shotgun. Gun smoke was added to tone down the blood and hide the removal of the character's head from his body. Foreign prints were not affected. The Region 1 DVD from MGM contains this altered take of the shotgun scene.
Wild at Heart has a rating of 64% on Rotten Tomatoes and a 52 metascore at Metacritic. It received mixed to negative reviews upon its initial theatrical release. Ebert wrote in his review for the Chicago Sun-Times, "He is a good director, yes. If he ever goes ahead and makes a film about what's really on his mind, instead of hiding behind sophomoric humor and the cop-out of "parody," he may realize the early promise of his Eraserhead. But he likes the box office prizes that go along with his pop satires, so he makes dishonest movies like this one". USA Today gave the film one and a half stars out of four and said, "This attempt at a one-up also trumpets its weirdness, but this time the agenda seems forced". In his review for Sight & Sound magazine, Jonathan Rosenbaum wrote, "Perhaps the major problem is that despite Cage and Dern's best efforts, Lynch is ultimately interested only in iconography, not characters at all. When it comes to images of evil, corruption, derangement, raw passion and mutilation (roughly in that order), Wild at Heart is a veritable cornucopia".Richard Combs in his review for Time wrote, "The result is a pile-up, of innocence, of evil, even of actual road accidents, without a context to give significance to the casualties or survivors". Christopher Sharrett in Cineaste magazine wrote, "Lynch’s characters are now so cartoony one is prone to address him more as a theorist than director, except he is not that challenging . . . One is never sure what Lynch likes or dislikes, and his often striking images are too often lacking in compassion for us to accept him as a chronicler of a moribund landscape a la Fellini". However, Peter Travers wrote in Rolling Stone magazine, "Starting with the outrageous and building from there, he ignites a slight love-on-the-run novel, creating a bonfire of a movie that confirms his reputation as the most exciting and innovative filmmaker of his generation".