Feature rights to Sebold's novel had been bought by Film4 Productions when it was only a manuscript with Lynne Ramsay attached to write and direct, but the company was eventually shut down. Jackson and his producer partners eventually acquired the rights independently and developed a script on their own, later selling it to DreamWorks. Production began in October 2007 in New Zealand and Pennsylvania.
The role of Jack Salmon had to be recast right before principal photography began. Ryan Gosling, who had gained 20 pounds and grown a beard for the role, had been cast. Gosling said "the age of the character versus my real age was always a concern of mine. Peter [Jackson] and I tried to make it work and ultimately it just didn't. I think the film is much better off with Mark Walhberg in that role.
In July 2003, the studio DreamWorks negotiated a first look deal with producer Peyronnet, after DreamWorks founder Steven Spielberg had expressed interest in the project. DreamWorks did not acquire the rights to the novel, and Ramsay was eventually detached from the project. In April 2004, producers Peter Jackson, Fran Walsh, and Philippa Boyens entered negotiations to develop the project. Jackson described the book as "a wonderfully emotional and powerful story. Like all the best fantasy, it has a solid grounding in the real world." By January 2005, Jackson and Walsh planned to independently purchase film rights and to seek studio financing after a script had been developed. The producers sought to begin adapting a spec script for The Lovely Bones in January 2006, with the goal of script completion and budget estimation by the following May. Jackson foresaw the most challenging element in the novel to adapt was the portrayal of Susie, the protagonist, in heaven, and making it "ethereal and emotional but not hokey". Saoirse Ronan explained Jackson chose to depict the afterlife as depending on Susie's emotions. "Whenever Susie feels happy, Heaven is sunny and there's birds and everything. Whenever it’s not so great, it's raining or she’s in the middle of an ocean.
A 120-page draft of the script was written by September 2006. In April 2007, with the script completed by Jackson, Walsh, and Boyens, and Jackson intending to direct, the group of producers began seeking a studio partner to finance the film adaptation. Besides the major studios, smaller companies including United Artists were also contacted. New Line Cinema was excluded from negotiations due to Jackson's legal dispute with the studio over royalties from his Lord of the Rings trilogy. Jackson sought a beginning $65 million budget for The Lovely Bones, also requesting from studios what kind of promotional commitments and suggestions they would make for the film adaptation. By May, four studios remained interested in the project: DreamWorks, Warner Bros., Sony, and Universal. The Lovely Bones was sold to DreamWorks for $70 million. Paramount Pictures received the rights to distribute the film worldwide. Production began in October 2007 in Pennsylvania and New Zealand. Shooting in parts of Chester County, including Phoenixville,Royersford Malvern and East Fallowfield lasted a few weeks, and most of the studio shooting was done in New Zealand.