Pavement hired British producer Nigel Godrich, who had produced Radiohead and Beck, to produce their fifth album. According to songwriter Stephen Malkmus, Godrich was a fan of the band and offered to produce with no fee, asking only for royalties. However, Malkmus said: "We paid for the studio time of course, which started to get expensive. Because had his own, uh, standards." The group worked first in a New York studio used by Sonic Youth. After Godrich felt the results were not sufficient, they moved to a studio once used by the Beastie Boys near Washington Square Park, where Malkmus estimated that three quarters of the album was recorded. Overdubs were recorded in RAK Studios in London. Dominic Mercott of High Llamas played drums for two tracks when Steve West could not play in time. Malkmus also played drums on one track. Jonny Greenwood of Radiohead played harmonica on "Platform Blues" and "Billie". According to Malkmus, deciding the tracklist created conflict; Godrich wanted to open with a "longer, more challenging song to set the tempo", similarly to the Radiohead album OK Computer. The other band members did not like his choice of opening track, which they had "barely played on", and wanted to open with an "easier" song. According to Malkmus, "Nigel was like 'I'm done with this. This is the wrong move. We made a stoner album and you're going halfway.' He’s right probably." In 2017, Malkmus described Terror Twilight as "a real, classic rock, overproduced, $100,000 record. With that much money you should be able to make something good. We made some things that weren’t as good as they could've been." In response to the comments, Godrich tweeted: "I literally slept on a friend's floor in NYC to be able to make that album."
Content
Many of the tracks on Terror Twilight were previewed at a pair of solo Malkmus shows in California on August 12–13, 1998. These included "Ann Don't Cry," "Carrot Rope," "Spit On A Stranger," "Platform Blues," "You Are The Light," "Folk Jam," and two others that remain unreleased to this day. At these shows, Malkmus played electric guitar and sang along with home demo recordings of the songs. The style of the recordings was similar to those found on the compilation At Home With the Groovebox, the B-sides of the Spit on a Stranger single, and the demo version of "Major Leagues" found on the Major Leagues EP. "The Hexx" was a quieter, slowed-down version of a discordant jam that was played extensively on the Brighten The Corners tour. Pavement had recorded a faster, louder version during the Brighten sessions—in fact, at one point "The Hexx" was to have been the opening track on that album. This recording was edited, retitled "...And Then" and issued as the vinyl B-side to Spit on a Stranger. The original, full-length recording can be found on . The single edit also appears among eight bonus tracks on the vinyl incarnation of the edition. The original cover art for Terror Twilight lists the final track, "Carrot Rope," as "...And Carrot Rope." This alternate song title was revived for the 2010 Record Store Day version of, even though the song was the fifth track on side one. Initial UK copies of the album came with a bonus CD-ROM which contained the whole album with a brief track-by-track commentary; film of Stephen Malkmus writing this – and calling for the help of his fellow bandmembers in doing so – can be seen on the Slow Century DVD. The disc also contained the videos for "Stereo" and "Shady Lane" from their previous album Brighten the Corners and a home movie segment containing some footage also seen in the Slow Century DVD.
Title
Pavement percussionist Bob Nastanovich came up with the title, and has described its meaning in an interview: "Terror Twilight is the short span between sunset and dusk; this is considered the most dangerous time in traffic, because half of the people switch on the headlights, and the other half doesn't. It's when most accidents happen." Nastanovich explained that his original idea for the title of the album was Farewell Horizontal but that he eventually dismissed the idea because "there was no way I was going to be on the Farewell Horizontal tour for the next year."
On the TV showHow I Met Your Mother, "Spit on a Stranger" was featured in the episode Drumroll, Please, while the Williams cover was featured in the episode Ducky Tie. "Major Leagues" was featured in the episode The Limo.
On the TV show Mission Hill, "Major Leagues" was featured in the original airing of the episode Andy Joins the PTA.