Factory Records did not release any singles from Unknown Pleasures, and the album did not chart despite the relative success of the group's non-album debut single "Transmission". It has since received sustained critical acclaim as an influential post-punk album, and has been named as one of the best albums of all-time by publications such as NME, AllMusic, Select and Spin.
Joy Division formed in Salford, Greater Manchester in 1976 during the first wave of punk rock. Bernard Sumner and Peter Hook had separately attended a Sex Pistols show at the Manchester Lesser Free Trade Hall on 4 June 1976 and both embraced that band's simplicity, speed and aggression. Forming a band with their friend Terry Mason on drums, Sumner on guitar and Hook on bass, they advertised for a singer. Ian Curtis, who Sumner and Hook already knew, applied and, without having to audition, was taken on. After a number of changes of drummer, Stephen Morris joined the band—at that time called Warsaw—in August 1977. To avoid confusion with the London punk band Warsaw Pakt, they renamed themselves Joy Division in late 1977.
After signing a recording contract with RCA Records in early 1978, Joy Division recorded some demos; however, they were unhappy with the way their music was mixed and asked to be released from their contract. The band's first release was the self-produced extended play (EP), An Ideal for Living, which was released in June 1978. They made their television debut on Tony Wilson's local news show Granada Reports in September 1978. According to Hook, the band received a £70,000 offer from Genetic Records in London. However, the band's manager, Rob Gretton, approached Wilson about releasing an album on his Factory Records label. Wilson explained that Gretton had calculated that given Factory's 50/50 split of profits, the band could make as much money with the indie label as it could by signing to a major. Wilson added that one of Gretton's main reasons for approaching Factory was so "he wouldn't have to get on a train to London every week and 'talk to nuggets'. No one could use the word 'cockney' with as much contempt as Rob". Gretton estimated that the album would cost £8,000 to produce; however Wilson said in 2006 that the up-front cost ended at £18,000.
Unknown Pleasures was recorded at Strawberry Studios in Stockport over three weekends between 1 and 17 April 1979, with Martin Hannett producing. Hannett, who believed that punk rock was sonically conservative because of its refusal to use studio technology to create sonic space, used a number of unusual production techniques and sound effects on the album, including several AMS 15-80s digital delays, Marshall Time Modulators, tape echo and bounce, as well as the sound of a bottle smashing, someone eating crisps, backwards guitar and the sound of the Strawberry Studios lift with a Leslie speaker "whirring inside". He also used the sound of a basement toilet. Hannett recorded Curtis's vocals for "Insight" down a telephone line so he could achieve the "requisite distance". Hannett later said, " were a gift to a producer, because they didn't have a clue. They didn't argue". Referring to the recording sessions, Hook remembered, "Sumner started using a kit-built Powertran Transcendent 2000 synthesiser, most notably on 'I Remember Nothing', where it vied with the sound of Rob Gretton smashing bottles with Steve and his Walther replica pistol." During the recording, Morris invested in a syndrum because he thought he saw one on the cover of Can's 1971 album Tago Mago.
AllMusic wrote that Hannett's production on Unknown Pleasures was "as much a hallmark as the music itself," describing it as "emphasizing space in the most revelatory way since the dawn of dub." Describing Hannett's production techniques, Hook said, " didn't think straight, he thought sideways. He confused you and made you do something you didn't expect." Hook went on to say, "Derek Bramwood of Strawberry Studios said that you can take a group that have got on brilliantly for 20 years, put them in a studio with Martin and within five minutes, they'll be trying to slash each other's throats." However, Hook went on to say that Hannett was only as good as the material he had to work with, "We gave him great songs, and like a top chef, he added some salt and pepper and some herbs and served up the dish. But he needed our ingredients." The band members' opinions differed on the "spacious, atmospheric sound" of the album, which did not reflect their more aggressive live sound. Sumner said, "The music was loud and heavy, and we felt that Martin had toned it down, especially with the guitars. The production inflicted this dark, doomy mood over the album: we'd drawn this picture in black and white, and Martin had coloured it in for us. We resented it..." Hook said, "I couldn't hide my disappointment then, it sounded like Pink Floyd."