Darryl F. Zanuck showed Fuller, who was then under contract to 20th Century Fox, a script by Dwight Taylor called Blaze of Glory about a woman lawyer falling in love with a criminal she was defending in a murder trial. Fuller liked the idea but knew from his previous crime reporter experience that courtroom cases take a long time to play out. Fuller asked Zanuck if he could write a story of a lower criminal and his girlfriend that he originally titled Pickpocket but Zanuck thought the title too "European". Fuller had memories of South Street from his days as a crime reporter and came up with his new title. Fuller met Detective Dan Campion of the New York Police Department to research the background material of his story to add realism, with Fuller basing the role of Tiger the police detective on Campion who had been suspended without salary for six months for manhandling a suspect.
Fuller turned down many actresses for the lead role including studio favorites Marilyn Monroe; Shelley Winters; Ava Gardner, who looked too glamorous; Betty Grable, who wanted a dance number written in; and initially Jean Peters, whom he did not like when he saw film of her in Captain from Castile. With only a week to go before the film started production, Fuller saw Peters walk into the studio's commissary while having lunch. Fuller noticed Peters walked with a slightly bow-legged style that many prostitutes also had. Fuller was impressed with Peters' intelligence, spunkiness, and different roles at the studio when he tested her the Friday before shooting started on the Monday. When Betty Grable insisted on being in the film and threatened to cause problems, Fuller promised to walk off the film. Peters was restored.
In August 1952, the script was deemed unacceptable by the Production Code, by reasons of "excessive brutality and sadistic beatings, of both men and women." The committee also expressed disdain for the vicious beating of the character "Candy", on the part of "Joey." Although a revised script was accepted soon after, the studio was forced to shoot multiple takes of a particular scene in which the manner of Jean Peters and Richard Kiley frisk each other for loot was considered too risqué.
The French release of the movie removed any reference to spies and microfilm in the translation. They called the movie Le Port de la Drogue (Carrying Drugs). The managers of 20th Century Fox thought that the theme of communist spies was too controversial in a country where the Communist Party was still hugely influential.
FBI director J. Edgar Hoover had lunch with Fuller and Zanuck and said how much he detested Fuller's work and especially Pickup on South Street. Hoover objected to Widmark's unpatriotic character especially his line "Are you waving the flag at me?", the scene of a Federal agent bribing an informer and other things. Zanuck backed Fuller up, telling Hoover he knew nothing about making movies but removed references to the F.B.I. in the film's advertising.