Dinohattan is the Super Mario Bros. film's equivalent to the Mushroom Kingdom, as well as Dinosaur Land. It differs drastically from both video-game counterparts in history and appearance, though retains some of the fantasy qualities the games are known for.
According to director Rocky Morton, Dinohattan was directly inspired by Dinosaur Land.
Dinohattan was created when a meteorite struck the planet Earth in prehistoric times and created a parallel dimension. While many dinosaurs were killed off due to the initial impact, some others survived on in this new dimension. Once there, they evolved into humanoid beings with a distinct, reptilian society.
Dinohattan itself has deteriorated even further due to crime and pollution resulting from President Koopa's neglect. A thick web of fungus has also spread across the city, which has disrupted any attempts at repair or expansion.
Dinohattan was originally ruled by King Bowser (unrelated to the character Koopa) and his unnamed wife, a member of the Portal-Keeper society. However, Koopa, a military officer, staged a coup and de-evolved the King into the fungus that now chokes the city. His chief platform as leader is to merge their world with ours and conquering it by claiming possession of a fragment of the meteorite that had destroyed the dinosaurs.
With the king and queen gone, Koopa set up a false democracy with himself the "President". He maintained this position for twenty years through false elections and a secret police made-up of de-evolved Goombas that remove political dissenters from the public eye.
After witnessing New York City twenty years previous while pursuing Daisy's mother and the meteorite shard, Koopa became obsessed with recreating the modern metropolis in his own world. However, he was unable to accomplish it and instead created a grotesque parody, which deepened his desire to rule Earth instead. While Koopa maintained that his desire to conquer the parallel Earth was meant to return his people to their former dominance, it is implied that he only sought Earth for himself.
Repeated mention is made to "gold Koopa Coins" throughout the film, suggesting some similarity to the form of currency seen in the games. The name features Koopa's name as well, which implies he renamed it upon taking over Dinohattan. What the currency was known as before is unknown.
The inhabitants of Dinohattan are humans and human-reptile hybrids that evolved from dinosaurs displaced millenia ago from our world. While most of the population is indistinguishable from mammalian-evolved humans, some do possess reptilian traits such as tails, slitted pupils, scales, and oviparity.
Typical dinosaurs also appear in the city, yet are treated as pets or wild animals. Koopa himself calls Yoshi a "throwback", suggesting a sense of racial superiority to their ancestors. Other animals, such as real-world lizards and snakes as well as fictional video-game Spinys, are seen or mentioned as food sources to this world's humans. Several typical dinosaurs are also seen eating fungus, suggesting omnivorous or herbivorous behavior.
 Notable Inhabitants