The Theatre Guild had been looking at its previously-produced properties to musicalize for some time. They had been interested in doing Ferenc Molnár's Lilliom as an operetta in late 1936/early 1937 and had approached composer Kurt Weill about working on it. He was quite interested and expressed his interest in several letters, in which he laid out a show involving "music, spoken scenes, an orchester [sic] of not more than 16 pieces, no chorus, good singing actors (or good acting singers)."
Weill had tried to get the rights to Lilliom a few years earlier but failed. Molnar wasn't accepting offers from composers for musicalizing his works. It wasn't until he saw Oklahoma! that he agreed to give the rights to the Guild.
In 1999, Time magazine named Carousel the best musical of the 20th century.