Ouzo production begins with distillation in copper stills of 96 percent alcohol by volume (ABV) rectified spirit. Anise is added, sometimes with other flavorings such as star anise, fennel, mastic, cardamom, coriander, cloves, and cinnamon. The flavoring ingredients are often closely guarded company "recipes", and distinguish one ouzo from another.[8] The result is a flavored alcoholic solution known as flavored ethyl alcohol, or more commonly as ouzo yeast—μαγιά ούζου in Greek—the term for "yeast" being used by Greeks metaphorically to denote that it serves as the starting point for ouzo production.

The ouzo yeast is then distilled. After several hours of distillation, a flavored distillate of approximately 80 ABV (% Alcohol By Volume) is produced. The spirit at the beginning of the distillation ( heads) and end (tails ) is usually removed to avoid heavy aromatics. The heads and tails are usually mixed and distilled again. The product of this second distillation can be used to produce a different quality ouzo .

This technique of double-distillation is used by some distillers to differentiate their product/s

Makers of high-quality "100% from distillation" ouzo proceed at this stage with water dilution, bringing the ouzo to its final ABV. But most producers combine the "ouzo yeast" with less expensive ethyl alcohol flavored with 0.05 percent natural anethole, before water dilution. Greek law dictates that in this case the ouzo yeast cannot be less than 20 percent of the final product.

Sugar may be added before water dilution, which is done mostly with ouzo from Southern Greece.

The final ABV is usually between 37.5 and 50 percent; the minimum allowed is 37.5 percent.[9]

Ouzo production itself does not include fermentation.