This film and A Room with a View (1985) both opened in New York on the same day, March 7, 1986. Both movies featured Daniel Day-Lewis in prominent and very different roles: in A Room with a View, he played a repressed, snobbish Edwardian upperclassman, while in Laundrette, he played a lower-class gay ex-skinhead in love with an ambitious Pakistani businessman in Thatcher's London. When American critics saw Day-Lewis, who was then virtually unknown in the US, in two such different roles on the same day, many (including Roger Ebert of The Chicago Sun-Times and Sheila Benson of the LA Times) raved about the talent it must have taken him to play such vastly different characters. In his review of My Beautiful Laundrette, Roger Ebert wrote, "A movie like this lives or dies with its performances, and the actors in 'My Beautiful Laundrette' are a fascinating group of unknowns.... The character of Johnny may cause you to blink if you've just seen the wonderful 'A Room with a View.' He is played by Daniel Day-Lewis, the same actor who, in 'Room,' plays the heroine's affected fiancee, Cecil. Seeing these two performances side by side is an affirmation of the miracle of acting: That one man could play these two opposites is astonishing."
Gary Oldman was the first choice to play Johnny. After he turned it down, the part went to Daniel Day-Lewis. In 2020 director Stephen Frears said "There was a list of four actors for Daniel's part; Tim Roth who I'd just worked with, Kenneth Branagh who was desperate for the part and clearly wasn't right for it, and Gary Oldman who said he'd played it before, and the girls all said "Oh you want Dan", and of course they were absolutely right".
Gordon Warnecke and Daniel Day-Lewis were called the Listerine Kids on set, due to their constant kissing of characters on set and downing Listerine before takes.
Hanif Kureishi, the writer of the film's screenplay, can be seen as a guest at Salim's dinner party. He is sitting at the table on the left side of Omar.