The song was originally intended for two separate Prince studio albums meant to be released in 1986, both shelved: Dream Factory and Crystal Ball.

[2] In 1987, Village Voice's Pazz & Jop critics' poll named "Sign o' the Times" the best single of the year, Prince's second recognition in that category.

All of the Fairlight sounds used on the song are factory presets, including the famed "orchestra hit" towards the end of the composition.

The lyrics are more similarly downcast than any of Prince's previous singles, addressing socio-political problems including HIV/AIDS, gang violence, natural disasters, poverty, the crack epidemic, the Space Shuttle Challenger disaster, the Strategic Defense Initiative, and the threat of nuclear war.

The accompanying music video for "Sign o' the Times" was produced by Jae Flora-Katz, of Flora Films, and supervised at Warner Bros Records by Susan Silverman.