Garbage began writing their second album, which would go under the working title of Sad Alcoholic Clowns,[4] in March 1997 in the band's label head Jerry Moss's vacation house in Friday Harbor, Washington.

Forced to stop after local police officers responded to complaints about the noise, some of the percussion was later incorporated into "Temptation Waits", "I Think I'm Paranoid" and "Hammering in My Head".

[9] The eventual title, Version 2.0, was a tongue-in-cheek take on how computers were heavily involved in the album's production, with Manson adding that "in the studio, at any given moment, someone would come in and find the four of us in front of the screen.

[12] This meant to "have the guitars noisier and write poppier melodies", showing how the band had grown together: "With Garbage, we were struggling to find an identity and to get comfortable with Shirley – and vice versa.

[11] The band wanted there to be echoes of music they like in the record, "and that means not just Björk and Portishead and Radiohead but the Beatles and Beach Boys and Frank Sinatra", Manson said, concluding that the album is overall "more diverse—it goes to extremes.

"[11] The increased usage of techno beats emerged from frequent exposure to electronic music during the Garbage tour, both in clubs and listening to The Prodigy and The Chemical Brothers.

Vig remarked that "the songs sound looser, tougher" that way,[11] as by the last concerts, "we'd speeded things up and toughened up a lot of the grooves" and in the album "we wanted that to be apparent from the get-go.

[11] The singer declared that the introspective nature of Version 2.0 served to "reassure myself while I'm going crazy" due to her experiences during production, as she was "living by myself in a hotel, and I had no one to really talk to" and every day coming back by herself really late after working on the studio.

The entire visual campaign for Version 2.0 was tailored to play off the album cover artwork, the icons designed to represent each single release, provided point-of-sale and the band's videogenic sensibility.

In North America, Version 2.0 was released on CD and cassette by Almo Sounds in partnership with Interscope Records, who shipped 500,000 copies to stores in the first week.

[17] The Version 2.0 World Tour officially kicked off with club dates starting at San Francisco's Warfield Theatre on May 20, 1998, and took the band to a number of cities in the United States and Canada.

[18] Garbage then travelled to Europe to play a number of rock festivals beginning June 1 at Netherlands' Pinkpop and wrapping up at Scotland's T in the Park on July 12.

[19] Garbage then returned to North America to support Alanis Morissette on two legs of her Junkie Tour, starting on February 16 in Cincinnati, routing along the Midwest, Four Corners states and onto the West Coast, ending on April 7 in Los Angeles.

The shows included visits to Israel and Iceland, although four concerts in the Baltic States and Russia were cancelled on the advice of the American Embassy due to the US's involvement in Kosovo.

[17] The final legs of the Version 2.0 tour see Garbage moving on to New Zealand and Australia to co-headline with Alanis Morissette, beginning in Auckland for 16 days from October 1, and ending in Newcastle.

[22] Titled the Campus Invasion Tour, and supported by Lit, the shows began on October 20 in Denver and is routed through the Midwest, North East and Southern States, Arizona and California.

[35] In a review for Time magazine, Christopher John Farley found its music exceptional because of songs that are gloomy and sexual yet lively and introspective,[36] while J. D. Considine of The Baltimore Sun said the album is a more melodic version of the approach exhibited on Garbage, and commended the songwriting and Manson's multifaceted singing.

[27] Chicago Tribune critic Greg Kot believed its mix of pop and electronica has an "ersatz charm", while the noisy production retains Garbage's tuneful hooks.

[37] Barry Walters of Spin felt the songs are better developed than on the band's debut, while showcasing their passionate, avant-garde sounds and Manson's personalized yet relatable lyrics.

[28] Rob Sheffield, writing in Rolling Stone, said the songwriting has improved, but Manson remains the highlight, her seductive, emotive singing evoking new wave greats and appropriating the band's complex sounds into a well-crafted, original rock album.

[31] Donna Freydkin of CNN commended the album for enhancing, not departing from, the style of the debut, and praised the amalgam of sounds and Manson's "clever, biting lyrics".

[12] In a column for The Village Voice, Robert Christgau concluded that the metallic, discordant music suits Manson's aggressive sexuality and allows listeners to experience sadomasochism vicariously through "12 impregnable theoretical hits".

[38] John Pecorelli of CMJ New Music Monthly felt that the album noticeably deviates from the style of Garbage as it is more melodious, more saturated, and features enhanced percussion, while its lyrical themes make it arguably more subversive.

Brett Milano conceded in Stereo Review that Garbage can produce hooky songs, but felt Manson showed limited "emotional range" as she sang in no other way but "sexy".

[33] Stephen Dalton of NME called the album a lifeless, "beautiful engineered piece of modern design" and believed Manson's lyrics to be its weakness, criticizing a directness and shortage of wit.

[42] It was included in year-end best-album lists by The Guardian, Q, Kerrang!, Melody Maker, NME, Select, Spin, Gear, Mojo and Music Week.