The film settings

The story line required a remote, non-urban location, so the movie was originally intended to take place in Kansas. SandersThe movie was originally intended to take place in rural Kansas, so that Stitch could interact with other characters while still being isolated from wreaking greater havoc. A decision to change the film's setting to the Hawaiian island of Kauai was an important choice in defining the plot more clearly. No other feature-length animated movie had ever taken place on any of the Hawaiian islands before.  In Sanders's words: "Animation has been set so much in ancient, medieval Europe—so many fairy tales find their roots there, that to place it in Hawaii was kind of a big leap. But that choice went to color the entire movie, and rewrite the story for us."

While the animation team visited Kauai to research the locale, their tour guide explained the meaning of ohana as it applies to extended families. This concept of ohana became an important part of the movie. DeBlois recalls: "No matter where we went, our tour guide seemed to know somebody. He was really the one who explained to us the Hawaiian concept of ohana, a sense of family that extends far beyond your immediate relatives. That idea so influenced the story that it became the foundation theme, the thing that causes Stitch to evolve despite what he was created to do, which is destroy."

The island of Kauai had previously been featured in such films as Raiders of the Lost Ark and the Jurassic Park trilogy. The Disney animators faced the daunting task of meshing the film's plot, which showed the impoverished and dysfunctional life that many Hawaiians and other Westerners lived during the recent economic downturn, with the island's serene beauty. The hula sequence in Lilo & Stitch plays a key role in establishing the movie's Hawaiian setting.