The film was made specifically as the second feature for an American double bill with Horrors of the Black Museum (1959).
The film was shot in three weeks on the same sets as Horrors of the Black Museum (1959) with some additional location work at an actual castle. This may not have been the original intent, however. 'According to The Hollywood Reporter production charts and Daily Variety news items, the film was to be shot entirely on location in London, although an October 1958 Los Angeles Examiner item added that the film was to be shot at Burntisland Castle in the Firth of Forth, Scotland'.
In June 1959, American International Records released a 45 rpm single by The Nightmares. The A-side song was titled '(Oooh I'm Scared Of The) Horrors of the Black Museum' and the B-side song was 'The Headless Ghost'. Each song ran a few seconds short of two minutes. The Billboard magazine in its issue of 6 July 1959 said that 'The Headless Ghost' record 'has good sales potential ... for kids who enjoy horror films' and rated the song at three stars out of four.
Cohen later said in an interview that 'We knocked out that picture very, very fast; that's why the running time is so short, like sixty-five minutes ... In fact, we started Headless Ghost as I was still finishing Black Museum, editing and cutting it. But I honestly don't recall too much else about this picture, it was so bad.' Cohen later admitted that the film was unfunny and that he 'never liked' it.
Pete Barbutti was released for personal home viewing on DVD by VCI Home Entertainment in 1996 in the US, by Image Entertainment in the US at an unspecified date, and by VCI Entertainment in 2010, again on DVD and again in the US.