"E.T. The Extra-Terrestrial," like other films made between 1975 and 1990, has special effects that were limited by still evolving digital technology, so it now joins "Star Wars" and "The Exorcist" in being digitally enhanced for effects-savvy moviegoers. Since the movie was one of the highest-grossing pictures of all time, raking in $400 million domestically in its initial release, an argument could be made for not tampering with success, but once the decision was made to re-issue the film, there was the usual discussion about putting some scenes back in. In particular, there was a bathroom scene that the original creative team loved, but had to edit out because of artistic issues, so the re-release was a chance to do the scene the way Spielberg had intended it to be done. Another scene that was put back in shows siblings Gertie (Drew Barrymore) and Michael (Robert MacNaughton) searching for E.T. after he goes missing on Halloween. From there, discussions touched on how other shots could be enhanced, since some of the film's original effects have not aged gracefully during the 20 years since the film's original release, even though they were state-of-the-art at the time. Work on the project began in summer 2000, but because the re-release had not been announced by Universal, the project was hushed up even at the effects house, where the film was referred to by its original working title, "A Boy's Life". Original director of photography Allen Daviau was consulted, but Spielberg spearheaded the project, going through the film and selecting scenes he wanted changed. Industrial Light & Magic's Bill George, whose first assignment for Industrial Light & Magic was working on the spaceship for "E.T.'s" initial release, supervised the visual effects for more than 140 reworked shots. George's mission was to live up to people's memory of the movie while satisfying the expectations of contemporary audiences. To achieve the highest-quality image, the original negative was obtained from Universal and scanned into a computer, requiring a tremendous amount of trust on the studio's part.

The biggest change is that E.T. is far more life-like and expressive than he originally was. In the original film, a variety of methods were used to create a believable alien. Hydraulic puppets were created by Italian effects expert Carlo Rambaldi, who, along with Industrial Light & Magic's Dennis Muren and Kenneth F. Smith, received a special-effects Oscar for his efforts. In addition, a team of lilliputian actors in body suits were used for long shots, while the character's close-up hand action was done by Caprice Rothe, a mime wearing an arm-length glove. The hydraulic E.T., although advanced for its time, still suffered from moments when the proper performance could not be achieved. That was why the bathroom scene, in which E.T. playfully submerges himself into the filled tub at Elliot's home, had to be yanked from the original release. There were smaller problems, with producer Kathleen Kennedy recalling one scene "where his lips got caught and we had to accept a funky smile," but "now we can go in and adjust the area where his lips got caught." For each new shot, the Industrial Light & Magic team digitally replaced only as much of E.T. as was necessary, at times replacing just the face, the head and neck, or sometimes the whole alien, with care taken not to over-animate. A lot of time was spent studying the character, so that its original charm and personal qualities were not lost. But at the same time, the creative team decided to do things it could not do before because of the limitations of the puppet. They wanted to make improvements, but without making the creature seem too different. One of the more noticable changes is the scene in which the spaceship leaves without E.T. In the 1982 version, there is a static shot of E.T. sadly gazing up to the heavens, but in the new edition the alien nimbly runs in pursuit of the ascending ship, stopping only when he realizes it is pointless, then wistfully lowering his head.