"There were a number of Jewish groups who missed the point of that song," he said. "They just thought that we were saying Jews were ugly."
The line was replaced with "She isn't a meeskite at all," but the response was tepid. (Meeskite was an old Yiddish term to describe an unattractive woman.) Grey, who is Jewish, said the lyrics didn't offend him and he was hesitant about changing them.
"I conveniently forgot about the change a few times," he said with a nod.
Fosse passed away in 1987. Daughter Nicole Fosse told CNN that when the famed director and choreographer worked, he "asked people to do something they had never done before."
Actress Marisa Berenson was still new to show business at the time she was cast as Natalia Landauer. "Cabaret" was her second film, and she remembered Fosse as a great director who brought out the best in her and found unique ways to challenge her.
"He played tricks on me and used to whisper erotic things in my ear before scenes so that I would kind of blush and feel strange," she said, "which I did. And, you know, all that to get a good performance, and so I learned a lot and it was really wonderful."
As the song goes, "Life is a cabaret, old chum," and that appears to have been the case for this cast as well.
"We were so close," Minnelli said. "We were in a world of our own, and I think that shows."
The actress/singer called the filming "one of the best beginning to end experiences I ever had. And every Friday night, (Fosse) gave a party on the set. In fact, there's a scene in the movie where you see somebody playing the saw. That was a stagehand who played the saw."
She added, "Making the movie was so much fun, and so weird and bizarre and very sensual."
"Cabaret" won eight Academy Awards, including best director (Fosse), best actress (Minnelli) and best supporting actor (Grey). It lost the best picture Oscar to "The Godfather."
"They said my name and my father (director Vincente Minnelli) screamed so loudly," Minnelli said, "screamed in my ear -- that I still have tinnitus. I do!"