Amid rising tensions within Something Corporate, the band went on a break; returning to his home in Orange County, California, frontman Andrew McMahon began working on a new project with producer Jim Wirt.

McMahon began playing shows with Jack's Mannequin in early 2005; the group embarked on six-week tour, which coincided with the single release of "Holiday from Real".

Over the next two months, McMahon was admitted to hospital, underwent two rounds of chemotherapy (in between which he contracted pneumonia), and had a bone marrow/stem-cell transplant from his sister Katie.

McMahon spent the next two months recovering at his parents' house before going in remission in October and played his first show since his diagnosis in December.

[5] Terry Wilson and Brian Coffman contributed to the recordings, the former playing sitar on "Kill the Messenger", and the latter with guitar on "MFEO" and "Into the Airwaves".

[25] McMahon was talking to manager, expressing concern that he didn't want to release the project with major label Geffen Records, who Something Corporate was signed to.

[32] McMahon wrote the material during a dark period of self-exploration in his life impacted by Something Corporate's hiatus and the ending of a long relationship with Kelly Hansch caused in part by his career pursuit.

[19] He also listened to electronic pop acts such as the Killers, the Faint and TV on the Radio, as well as David Bowie and Madman Across the Water (1971) by Elton John.

[41] Many elements of the Beach Boys are found on the album,[42] including the booklet featuring an autobiographical tale in the form of a storybook inspired by Pet Sounds.

[28] "Holiday from Real" opens with barely audible sounds of seagulls,[43] beaches and traffic, before moving into a bass slide.

[37] "Bruised" includes a drum machine, and was compared to Straylight Run with McMahon's upbeat vocal take;[46] it talks about handling the loss of leaving a partner.

"[6] "Miss Delaney" is about a girl based in Seattle, Washington that helped McMahon through a rough period in his life; it has a theremin reminiscent of the one heard on the Beach Boys' "Good Vibrations".

[37] After touring with Something Corporate in January and February 2005,[52] McMahon began playing shows with Jack's Mannequin in March and debuted material from the project.

[53] McMahon's backing band, named the Mannequins, consisted of Anderson and Jacques Brautbar on guitar, Jon Sullivan on bass and Jay McMillan on drums.

[61] Two days later, it was announced the album's release date was pushed back to August 9 as "Dark Blue" was written and recorded for inclusion on it.

[67] McMahon contacted the label and advised them while he would be unable to promote the album until he was completely healthy,[6] they should go ahead with its August 9 release date.

[31] As a result of multiple rounds of chemotherapy, his white blood cell count was almost at zero, and coupled with a weak immune system he contracted pneumonia.

His white blood cell count eventually increased, and he decided to undergo a stem-cell transplant, rather than the longer and painful process of bone-marrow grafting.

[72] After finding out his sister Katie was an eligible donor,[6] he went through a second round of chemotherapy[67] before receiving the stem-cell transplant on the same day the album was released.

[24] During that month, McMahon performed "The Mixed Tape" on an episode of One Tree Hill, where Hilarie Burton's character holds a benefit concert.

[65] He slowly started performing one-off shows with his backing band in California, before eventually going on a short five-date tour out of the state in March.

[86] Everything in Transit was re-released on November 7, featuring a DVD of live performances, music videos for "The Mixed Tape" and "Dark Blue", and interviews.

AbsolutePunk staff member Rohan Kohli wrote that the album explored the "complete emotional spectrum, taking you along on a journey that will make you both smile and cry," in some cases on the same track.

"[37] Sputnikmusic staff member SowingSeason considered the release perfect for "lazy, sunny afternoons when the sky is blue [and] the seagulls are flying around in a frenzy.

[43] Ultimate Guitar said McMahon's phenomenal "meaningful" lyrics help the listener to create "a set of vivid pictures and moods in [their] head.

"[99] AllMusic reviewer Stephen Thomas Erlewine noted that while it was not far removed from what McMahon was doing with Something Corporate, the album "sounds truer to his artistic inclinations" than any of that band's releases.

[39] Though he added it "really shouldn't work ... [an album] delivered by an emo songwriter, backed by an aging metalhead, and co-produced by a guy who gave Hoobastank hits.

"[39] JR of IGN viewed the record as "mature, studied, delicate, and memorable," but felt it "drags, at times ... both sonically and thematically.

"[47] He added that around a third of the tracks were "in need of revisions, [but] perhaps the most troubling aspect ... is that a collection of songs about such a personal episode can sound so blandly general.

[105] Footage of the recording sessions, and McMahon's diagnosis and subsequent recovery was released as part of the documentary film Dear Jack in November 2009.