The recording of American Beauty came on the heels of the band's commercial breakthrough with their previous album, Workingman's Dead. For American Beauty, the band continued to explore the acoustic-based sound that they had developed on Workingman's Dead, but also introduced new elements such as country and bluegrass influences.

The album's songwriting was led by Jerry Garcia and Robert Hunter, who had become the band's primary lyricist. The songs on American Beauty are known for their intricate harmonies, memorable melodies, and thoughtful lyrics that touch on themes of love, loss, and redemption.

Upon its release, American Beauty received widespread critical acclaim and became a commercial success, reaching #30 on the Billboard 200 chart. The album's legacy has only grown over time, with many music critics and fans considering it one of the greatest albums in rock history.