After quitting their jobs in 1980, brothers Jim and William Reid formed The Jesus and Mary Chain with bass player Douglas Hart. Taking inspiration from German industrial band Einstürzende Neubauten, girl group the Shangri-Las and The Velvet Underground & Nico, they bought a Portastudio in 1983 when their father lost his job in a local factory and gave the brothers £300 from his redundancy money. The band recorded a demo tape containing the songs “Upside Down” and “Never Understand” which was heard by Glaswegian musician Bobby Gillespie, who in turn passed it on to his friend Alan McGee of Creation Records. McGee was impressed with the tape and invited the band to play at a Creation Records showcase event in London, becoming the band’s manager shortly afterwards.
Following more London concerts, the Jesus and Mary Chain entered Alaska Studios in Waterloo and recorded their debut single, “Upside Down”. Released by Creation Records in November 1984 and featuring a B-side produced by Slaughter Joe, Upside Down sold out its initial pressing and ended the year by being placed at number 37 in John Peel’s Festive Fifty. After recruiting Gillespie as their drummer in late 1984, the Jesus and Mary Chain signed to the WEA subsidiary label Blanco y Negro, which had been established by Rough Trade founder Geoff Travis. The band entered Island Studios to record with engineer Stephen Street but the sessions proved to be fruitless and the band returned to Alaska Studios for the recording of their second single, “Never Understand”. The single was released by Blanco y Negro in February 1985, and in March that year they began recording their debut album with engineer John Loder at Southern Studios in Wood Green, North London. Psychocandy was recorded in six weeks and totalled £17,000 in recording and production costs.