In 1982, Young left Reprise Records, his record label since his debut album in 1968, to sign with Geffen Records—the label founded and owned by David Geffen, who had worked with Young as manager of Crosby, Stills, Nash & Young. Young's contract guaranteed him $1 million per album, as well as total creative control over his output.
From late 1980 to mid-1982, Young spent much of his waking hours carrying out a therapy program for his young son, Ben, who was born with cerebral palsy and unable to speak. Neil disclosed to almost no one at the time that he was doing so, or that the repetitive nature of the songs on both the previous album, Re-ac-tor, and this one related to the exercises he was performing with Ben. Work on Trans began in late 1981 as a continuation of Re-ac-tor, with the usual Crazy Horse lineup. But then Young started playing with two new machines he had acquired, a Synclavier and a Vocoder. Crazy Horse guitarist Poncho Sampedro recalled, "Next thing we knew, Neil stripped all our music off, overdubbed all this stuff, the vocoder, weird sequencing, and put the synth shit on it."
Young's direction was influenced by the electronic experiments of the German band Kraftwerk, but more importantly he felt that distorting his voice reflected his attempts to communicate with his son. "At that time he was simply trying to find a way to talk, to communicate with other people. That's what Trans is all about. And that's why, on that record, you know I'm saying something but you can't understand what it is. Well, that's exactly the same feeling I was getting from my son."
Young's first work for Geffen was a group of songs for an entirely different project, Island in the Sun, recorded in May 1982 in Hawaii. According to Young, it was "a tropical thing all about sailing, ancient civilisations, islands and water." Young recalled later, "Geffen thought it was okay, but he didn't think it was good enough."
Instead of recording more new material, Young went back to the synthesizer tracks, actually recorded in the last days of the Reprise contract, and put together an album of songs from the two very different projects, three from Island in the Sun and six of the synthesizer tracks. Young proposed making a video to go with the album that would have clarified what the album was about. "All of the electronic-voice people were working in a hospital, and the one thing they were trying to do is teach this little baby to push a button."
After a year of work, the album was mixed in a hurry because Young was eager to go out on tour, and a last-minute change in the running order is evident in the inclusion of a song called "If You Got Love" in the track listing and lyric sheet, even though it is not on the album.