[8] The tour for the group's More Specials album in late 1980 had been a fraught experience: already tired from a long touring schedule and with several band members at odds with keyboardist and band leader Jerry Dammers over his decision to incorporate "muzak" keyboard sounds on the album, several of the gigs descended into audience violence.

"[4] In an interview in 2011, Dammers explained how witnessing this event inspired his composition: The overall sense I wanted to convey was impending doom.

[9] Jo-Ann Greene of Allmusic notes the lyric "only brush[es] on the causes for this apocalyptic vision — the closed down clubs, the numerous fights on the dancefloor, the spiraling unemployment, the anger building to explosive levels.

[11] In March 1981, Jerry Dammers heard the reggae song "At the Club" by actor and singer Victor Romero Evans played on Roundtable, the singles review show on BBC Radio 1.

[12][13] Following conversations with Dammers, Collins travelled from his home in London to meet the Specials at their rehearsal studio and agreed to produce their new single.

After becoming overwhelmed with the multitude of choices available in the 24-track studio used during the recording of More Specials, Dammers had decided that he wanted to return a more basic set-up, and after a recommendation from bass player Horace Panter who was familiar with the place, the band chose the small 8-track studio in the house owned by John Rivers in Woodbine Street in Royal Leamington Spa.

[12] Tensions were high during the recording of the single, with little communication between the band members, and at one point, a frustrated Roddy Byers kicked a hole in the studio door, angering Rivers.

[12][13] Collins took a recording of the separate tracks back to his home in Tottenham in north London where he spent three weeks mixing the song.

Since the song had no proper beginning or ending during recording at Woodbine Street, Collins recreated the idea of fading in over a sound effect, which he had used previously on "Lift Off", the B-side of "At the Club".

To achieve the effect he wanted, Collins utilised a kit-built Transcendent 2000 synthesiser to create a "ghost" sound, which he used to fade in and out at the beginning and end of the track.

is a plea for racial tolerance and was written by guitarist Lynval Golding in response to a violent racist attack he had suffered in July 1980 outside the Moonlight Club in West Hampstead in London, which had left him hospitalised with broken ribs.

The music video, directed by Barney Bubbles, consists of bass player Panter driving the band around London in a 1961 Vauxhall Cresta, intercut with views of streets and buildings filmed from the moving vehicle, and ends with a shot of the band standing on the banks of the River Thames at low tide.

Contemporaneous reviews identified the song's impact as an "instant musical editorial" on recent events (the 1981 England riots).

[4] In response to the linking of the song to these events, singer Terry Hall said, "When we recorded 'Ghost Town', we were talking about [1980]'s riots in Bristol and Brixton.

[citation needed] The song experienced a thematic resurgence on music streaming platforms in 2020, after lockdown orders were placed following the COVID-19 pandemic.

[24] In 2022, it was included in the list "The story of NME in 70 (mostly) seminal songs" at number 19, for "Lacing ska and reggae with the amphetamine edge of new wave".