Walton and O'Rourke, famous in puppeteering circles, made the puppets. They mostly worked in cabarets and did not appear on television. Lili is among the few known filmed records of their work which also includes the Walter Lantz cartoon and live action short film, Oswald the Lucky Rabbit: Puppet Show (1936).
Walton and O'Rourke manipulated Marguerite and Reynardo, George Latshaw was responsible for Carrot Top, and Wolo Von Trutzschler handled Golo the Giant. Burr Tillstrom was approached to create puppets for the film, but turned it down.