The stories of City of Saints and Madmen are set in Ambergris, an urban sprawl named for "the most secret and valued part of the whale" and populated by humans after its original inhabitants—a race of mushroom-like humanoids known as "gray caps"—were violently driven underground.

Ambergris began in 1992 with "Learning to Leave the Flesh", a short story conceived for the Clarion writers' workshop at Michigan State University.

It contained four novella-length pieces: The following year, a deluxe edition of City of Saints and Madmen appeared in hardcover format from Prime Books.

All four novellas from the first edition were revised, and new material was added as an appendix to the book: When the collection was published in the United Kingdom by Tor Books in 2004, two extra stories were offered: The remaining material is unchanged, although "The Man Who Had No Eyes" had to be decrypted for the mass market paperback edition since the original cipher was made unusable by the change of format and the publisher decided not to re-encode the story.

Relying on Dradin, in Love for the main narrative, they drew also on elements of King Squid, The Exchange, and the dust jacket's untitled vignette.