The 73-year-old actor, who plays Gandalf, felt some of the effects got in the way of his acting, and so he and director Sir Peter Jackson had to come to a compromise.
Sir Ian said: "The trouble with the dwarves is that they have to look smaller than me on the screen and there are a number of devices to accomplish that, and none of them is really congenial to acting which is about spontaneity and looking the other actor in the eye. And sometimes, cruelly, you are actually not in the same space while you are filming the same scene.
"On the first day I rather shamed myself by grumbling to myself that this sort of filming wasn't why I'd become an actor - and I'd forgotten I was wearing a microphone, so everybody including Peter heard!
"But I was rewarded the next day with love because my little tent where I get made up had been decorated overnight and I was made to feel that it was going to be alright, and indeed it was."
Peter explained he used low-tech devices such as Sir Ian standing on a box, and added: "There's also Ian's favourite technique, which was the dwarves on their knees!"
Sir Ian also revealed how much he enjoyed The Hobbit, as he felt Gandalf was boring in The Lord Of The Rings.
"He comes back as the most boring man or wizard that could have possibly been invented," he said.
"The beard is gone, he seems to have stopped having any fun and of course he has got to save Middle Earth. He doesn't even have a pointy hat."