(Pretty much all of the info I have on the production of this film comes from this featurette on the making of Hollywood Chainsaw Hookers, I definitely recommend checking it out if you have the time!)
Fred Olen Ray had been working as director on low-budget films for a number of years in Hollywood, kind of like a cheaper, sleazier, less-successful Roger Corman. By 1985 he had begun working on several films per year, shooting as quickly and cheaply as possible. By the late 80s, Fred had struck a production deal with an adult video company called LA Video and their subsidiary, mainstream distribution company, Camp Motion Pictures. LA Video expressed interest in distributing a new film for Fred and it was here that he pitched his idea for Chainsaw Hookers. LA Video added "Hollywood" to the title to make it sound more like Texas Chainsaw Massacre and Fred managed to rope Gunnar Hansen into the project. This was, of course, at the time when both Cannon Films and New Line Cinema weren't interesting in working with Gunnar Hansen since they didn't think he was a big enough star, so it just goes to show how much wiser Fred Olen Ray was than either company. With Hansen on board and $25,000 in hand from LA Video in exchange for the home video rights, Fred went about making his film, rewriting a script by T.L. Lankford.
In addition to snagging Gunnar Hansen to play the main villain, The Master, Fred Olen Ray managed to get Linnea Quigley to play the female lead. Qugiley is best known for being naked in a number of famous horror roles throughout the 80s, and by this point had already been in Silent Night, Deadly Night and Return of the Living Dead, so Hollywood Chainsaw Hookers was more-or-less the perfect role for her. John Henry Richardson was also cast as the male lead, Detective Jack Chandler.
Naturally, this being a Fred Olen Ray film, he made it while working on other projects. While doing pick-ups on a low-budget movie called Moon in Scorpio, Fred agreed to take a lower pay cut in exchange for the use of Trans World Entertainment's studio space and film equipment during downtime, which he would use to film Hollywood Chainsaw Hookers. As per the agreement, he had the equipment from Friday to Sunday, filmed the pick-ups for Moon in Scorpio Monday to Thursday and then finished Hollywood Chainsaw Hookers the next Friday to Sunday. All in all, he took about 5 1/2 days to shoot the film on a measly budget in the neighbourhood of $55,000. Naturally, the filming conditions were extremely sketchy - it was shot with no permits, on leftover sets from other films, with real chainsaws and even with real hookers on occasion! Even the film stock was as cheap as possible, using short ends which were left over from other films. The audio was all shot on set as well, so considering that there are chainsaws revving loudly on a number of occasions, you can't tell what the characters are saying at all sometimes because there was no budget for redubbing dialogue. The conditions were also potentially dangerous for the cast, particularly since they were using real chainsaws - in one notable instance, Linnea Quigley (who had already spent seven hours in makeup) was locked inside of a coffin with two running chainsaws so that she could preform the film's iconic virgin dance of the double chainsaws. Naturally, this meant that the coffin was quickly filled with chainsaw fumes and Quigley can be visibly seen stumbling out of the coffin because she could barely breathe.
Hollywood Chainsaw Hookers ended up being one of Fred Olen Ray's more successful films. That said, I want to just look at his career a little bit. He's been making mockbusters, sexploitation films and, most recently, freaking Hallmark Christmas movies in order to get by (I'm pretty sure I've even seen at lest one of those Christmas movies too, holy shit). He's like The Asylum before that studio cornered the mockbuster market. Most obviously, in 1994 we've got Dinosaur Island (riffing on Jurassic Park), in 1998, Mom Can I Keep Her? (Mighty Joe Young) and in 2011, Bikini Time Machine (Hot Tub Time Machine). Oh, and he's been releasing sleazy, borderline-softcore porno films throughout his whole career, although they seem to have picked up and become more pornographic since the 2000s. Just trolling through his directing credits, we've got such fantastic titles as Bikini Airways, Attack of the 60 Foot Centerfold, Thirteen Erotic Ghosts (which must have the best IMDb description ever), Genie in a String Bikini, Super Ninja Bikini Babes (which sounds like an alternate title for Dead or Alive) and Tarzeena: Jiggle in the Jungle. Lately, he's been slumming it with shitty Christmas movies, having released 10 since 2007 (and 9 of those have been since 2012, bloody hell), and with cheap crime films, which should probably give you an idea of the cultural zeitgeist when these are the only profitable genres left.