The group began production of their fifth studio album with Will Yip in June 2016 at the house of singer Sherri DuPree-Bemis, and Say Anything frontman Max Bemis, in their hometown of Tyler, TX.

The album saw the group return to some of their pop-sensibility, featuring a more guitar-driven approach at the hands of Garron DuPree, and signature whimsical vocal style of DuPree-Bemis.

During an interview with Garron, it was said that the album was named after The Beatles song "I'm Only Sleeping", citing heavy influence from the band during the creation of I'm Only Dreaming.

Dupree said of the title, "It felt like a lucid dream, one that I was afraid that I might wake up from, but I didn’t want lose that feeling.

So I’m Only Dreaming sort of captured some of that hope, fear, and joy that I felt while making the record."