Mitchell wrote Little Green in 1967 about the daughter she had placed for adoption in 1965, when she was a poor folk singer in Toronto. The existence of her daughter, originally called Kelly Dale, was not publicly known until 1993, when a roommate from Mitchell's art-school days in the 1960s sold the story of the adoption to a tabloid magazine. Mitchell commented on the situation in an interview quoted in a 1998 article: "I was dirt poor. An unhappy mother does not raise a happy child. It was difficult parting with the child, but I had to let her go." Mitchell was reunited with her daughter, Kilauren Gibb, in 1997.

The guitar tuning Mitchell uses on the song is Open G (low-to-high: D G D G B D).

Writing for Rolling Stone in 1971, Timothy Crouse, said:

Several of the lesser cuts on Blue give every indication of having sat in Joni's trunk for some time. The folkie melody of "Little Green" recalls "I Don't Know Where I Stand" from her second album. The pretty, "poetic" lyric is dressed up in such cryptic references that it passeth all understanding.

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