Castle in the Air draws on the stories of One Thousand and One Nights, also known as Tales from the Thousand and One Nights or Arabian Nights. This is a collection of stories that broadly originate from the Middle East and were collated in Arabic during the Islamic Golden Age. These folk tales were collected over a period of centuries by different writers and translators from a wide geographical area. Its influences may include ancient and medieval Arabic, Sanskrit, Persian, and Mesopotamian literature. The Abbasid and Mamluk eras are widely considered the most influential in these folk tales.

However, two of the most famous stories associated with One Thousand and One Nights were not actually found in any of the original Arabic collections. Aladdin and the Wonderful Lamp and Ali Baba and the Forty Thieves have influenced global folk stories and are famous for tropes that are now commonly used in folk and fantasy, such as the genie in a lamp or the flying carpet. These first appear in a French language collection by Antoine Galland, who learned them from Hanna Diyab, a Syrian writer and storyteller. The emergence of these stories in a written European translation may explain the popularity of these tropes in European literature.