Consequently, the band's third album, Wincing the Night Away (2007), was a major success for the group, peaking at number two on the Billboard 200 and earning a Grammy Award nomination.

Following this, the Shins signed to Columbia Records and Mercer parted ways with the entire original lineup, deeming it "an aesthetic decision".

[5] Mercer became the band's primary songwriter, and consequently, "the group developed a more focused, crafted sound than Flake Music's charming, if somewhat rambling, collaborative style.

[5] Mercer sent a demo to Sub Pop Records in Seattle, Washington, and label co-founder Jonathan Poneman caught a concert in San Francisco while the band was on tour with Modest Mouse.

[5] "Before you knew it, my whole life was upside down: I got signed, I quit my job, I moved out of town, the big relationship I'd had for five years ended.

[5][7] The album received critical acclaim and solidified the band as one of indie rock's definitive artists,[3] while also placing Albuquerque on the musical map with Oh, Inverted World's "gloriously skewed pop and [how it is] dripping with yearning, whimsy and brittle innocence.

"[8] The album helped re-establish Sub Pop Records as a dominant force in the independent community; the label had been without a marquee artist for many of the prior years.

[2] The group spent the rest of the year touring with acts such as Preston School of Industry and Red House Painters.

[9] The song was featured in a McDonald's advert that aired during the 2002 Winter Olympics,[10] which led to criticism from several corners, among those independent music fans and the band's own hometown alt weekly.

[11][12] The royalties Mercer earned from the commercial allowed him to purchase a home and relocate to Portland, Oregon, where the group built a basement studio and recorded their second album, Chutes Too Narrow (2003).

In a scene from the film, Sam (portrayed by Natalie Portman) tells Andrew Largeman (played by director Zach Braff) that the song "will change your life.

"Mainly I was tired of being right in the middle and everything sort of revolving around me, including the friendship dynamics-slash-bandmate dynamics and the creative aspect", Mercer explained in 2012.

[21] Mercer was approached by Brian Burton (Danger Mouse) around this same period regarding a possible collaboration on a new project, which became Broken Bells.

[21] Enjoying the fresh approach with Broken Bells in regard to meeting new musicians, Mercer desired to continue that feeling.

Mercer parted ways with longtime bandmates Dave Hernandez, Martin Crandall and Jesse Sandoval, terming it "an aesthetic decision".

[15] Working with Burton on Broken Bells helped Mercer overcome fears of collaboration, which in turn influenced the rotating "cast of characters" that grouped together around him to record Port of Morrow, which became the Shins' fourth album upon its March 2012 release.

"I always loved these auteurs who presented themselves as bands", Mercer later explained, referencing Neutral Milk Hotel and Lilys as examples, which led to him feeling as though he could pursue something similar, allowing the concept of The Shins to carry on.

[24][25] Mercer began touring with an all new backing band, including fellow songwriters Jessica Dobson and Richard Swift, Modest Mouse drummer Joe Plummer, and Yuuki Matthews from the Crystal Skulls.

[36] Former bassist Neal Langford, who played on Oh Inverted World and in Flake Music with Mercer, died on July 21, 2023, at the age of 50.

[5] The group received comparisons to the "pop revivalists" at the Elephant 6 Recording Collective early in their career,[clarification needed] such as The Apples in Stereo,[clarification needed] whilst Mercer's vivid, often surrealist lyrics and infectious melodies drew comparisons to the songwriting style of Robert Pollard from Guided by Voices.