Laughing Stock was recorded at London's Wessex Sound Studios from September 1990 to April 1991 with producer Tim Friese-Greene and engineer Phill Brown.

Engineer Phill Brown stated that the album, like its predecessor, was "recorded by chance, accident, and hours of trying every possible overdub idea.

The album garnered significant critical praise, often cited as a watershed entry for the budding post-rock genre at the time of its release.

By the time the masters were delivered later in the month, however, the label conceded that the album had been satisfactorily completed,[16] and chose to extend the band's recording contract.

[17] Centered around whether EMI had notified the band in time about the contract extension, because as part of the agreement, the label had to send a written notice within three months after the completion of the album, but the band said they had notified them too late, arguing that the three-month period began once recording had finished; EMI argued that the three-month period did not begin until they were satisfied with the recording.

Justice Andrew Morritt ruled in favour of EMI, but his decision was overturned in the Court of Appeal of England and Wales.

Again hiring an array of guest musicians, producer/multi-instrumentalist Tim Friese-Greene and engineer Phill Brown, work began on Laughing Stock in 1990.

"[24] As with the band's previous album, Laughing Stock was produced by Tim Friese-Greene and recorded at the North London recording studio Wessex Sound Studios with engineer Phill Brown,[1] and around fifty guest musicians,[18] although a total of only eighteen guest musicians feature on the final album.

[25] The record was "only complete" when Hollis felt each guest musician had "expressed their character and refined their contribution to the purest, most truthful essence.

"[26] Wyndham Wallace of The Quietus said that "what went on in that studio strengthens the belief that Hollis was on a crusade to push boundaries and perfect his art on an even grander scale than Spirit of Eden.

"[10] Brown and the band worked with a Studer A800 24-track recorder with Dolby SR noise reduction, which, to make editing simpler, was run at 30 inches per second.

"[10] Following this, Brown and Hollis rented the Telefunken U47, a large-diaphragm condenser valve microphone manufactured by Georg Neumann GmbH during the years 1949–1965.

"[10] From this point, they continued to overdub further textures and instruments, including cellos, pianos, harmoniums, guitars, double bass, violas, harmonica, percussion, Melodica, Hammond organ, Variophon, drums, and unusually, a water heater and kettle, as well as techniques such as "sampling, looping, off-setting, and the odd backwards F/X.

Really, it's just going back to one of a couple of things – either the jazz ethic or y'know, an album like Tago Mago by Can, where the drummer locked-in and off he went and people reacted at certain points along the way.

Laughing Stock consists of six tracks; Steve Sutherland said the album is "divided into six parts although it's really one long piece spanning an evolution of moods.

"[28] In a radio interview with Richard Skinner at the time of the album's release, Hollis commented that "I think silence is an extremely important thing.

Drums were miked far from the kit, sounds were allowed to echo through the studio space, mistakes were an integral part of the performance, and the album's dynamics are entirely genuine, the live feel of a jazz record.

"[29] “Taphead", "a masterfully subtle piece of music", begins with a simple guitar melody and Hollis' "wavering, unsure vocals," when keyboards unexpectedly fade in "and then the darkest, warmest trumpet sounds, one after the other, building beautiful harmony, with tension and release techniques apparent throughout the feature.

"[29] When the band delivered Laughing Stock to Verve, Polydor were purported "gutted", wondering how they would be able to sell such an uncommercial record.

It was an embarrassingly desperate attempt over cocktails to convince store owners that they should stock a record which, the company was trying to infer, stood for quality over likely quantity of sales.

"[41] Ian Cranna of Q said that while "the melancholy mood, a rare thoughtfulness and the sense of sharing something deeply personal, together with the haunting, emotional quality of the understated music, put Talk Talk heavily at odds with the commercial charts ... the same qualities will ensure that even though Laughing Stock may lose Hollis some of his newly found friends, it will be valued long after such superficial quick thrills are forgotten.

"[38] At the end of 1991, Laughing Stock was listed by Melody Maker as the year's 12th best album,[46] while Oor ranked it 20th best;[47] it also placed at number 26 on Eye Weekly's year-end critics' poll.

[24] "A work of staggering complexity and immense beauty," wrote AllMusic critic Jason Ankeny, "Laughing Stock remains an under-recognized masterpiece, and its echoes can be heard throughout much of the finest experimental music issued in its wake.

"[36] Reviewing the album for The Times, Victoria Segal found that in its "instrumental richness and exploratory dynamics", it "chimes unexpectedly with many recent developments in today's rock landscape", while also noting an "emotional heat" which "stops Laughing Stock from being mere academic indulgence.

"[29] In The Irish Times, Donal Dineen wrote that the album "shows what magic can happen if bands have the talent and daring to push boundaries".

[citation needed] Laughing Stock is considered, along with Spirit of Eden and Slint's Spiderland, to have been the primary catalyst of the post-rock genre.

"[51] The term "post-rock" itself was not coined until Simon Reynolds used it in his Melody Maker review of Hex (1994) by Bark Psychosis, which featured Talk Talk-inspired ambient experiments.

[52] Laughing Stock has also influenced Elbow and Bon Iver,[18] and in 2011, Jess Harvell of Pitchfork said "many indie rock bands and experimental composers have genuflected toward it over the last 20 years.

"[26] Norwegian singer-songwriter Jenny Hval said in 2011 that Laughing Stock "is an incredibly intuitive and bare recording – some songs feel like vapour trails.

If Spirit of Eden is the older, pretty and sophisticated big sister who got all the A grades, then Laughing Stock is the wayward, grubby wee brother who got kicked out of school for skiving.