In the film, the song is performed by Giselle. During their walk through Central Park, Giselle questions Robert's (Patrick Dempsey) view on love after finding out that he has been with his girlfriend, Nancy (Idina Menzel), for five years and has yet to propose to her. She spontaneously starts to sing in order to explain to him how he should show his affection for Nancy. As Giselle sings and dances through the park, she is joined by other people in the park including buskers, a steelband, elderly dancers, Bavarian dancers, and rollerbladers. They follow her to Bethesda Fountain, where they finish the song. In addition to the aformentioned Disney numbers, That's How You Know is played out like big numbers from other musical films such as Thank You Very Much from Scrooge and Consider Yourself from Oliver! (the latter also featuring dances from various people including butchers and fishmongers before ending in a flashmob).
Although the song is sung by Amy Adams in the film, Tony award-winning actress/singer Kristin Chenoweth, who co-starred in the Broadway musical Wicked with Idina Menzel ("Nancy Tremaine" in Enchanted), performed an abbreviated version (the second verse and refrain following that were omitted) at the 80th Academy Awards ceremony with Saunders and the dancers from the film at the ceremony. Adams had performed earlier in the broadcast, singing "Happy Working Song" solo.
Lovato's version deviates heavily from the original, having a very different chord progression in the background, eliminating all traces of the calypso influence, and relying heavily on electric guitars and drums. It was her first and final single on the Disney compilation album Princess DisneyMania. It was released to digital download as promotional single on May 20, 2008.