With Metallica scheduled to play the 1987 Monsters of Rock festival at Castle Donington, the band's UK label Vertigo Records suggested they release new material to mark the occasion. Initial songwriting attempts with new bassist Jason Newsted resulted only in a demo for "Blackened", and vocalist/guitarist James Hetfield subsequently broke his arm skateboarding and was unable to play guitar for several weeks. Given these obstacles, the band decided to record covers of some of their favorite songs, rather than work on new material. Newsted used his construction experience to soundproof Lars Ulrich's garage in El Cerrito, California, where the band would rehearse the material prior to recording.
While rehearsing the song "White Lightning" by New wave of British heavy metal band Paralex, Kirk Hammett at some point started playing "The Wait" by post-punk group Killing Joke, and the band subsequently decided to record the song. Other tracks considered but dropped include "Signal Fire" by Japanese band Bow Wow, and another NWOBHM song, Gaskin's "I'm No Fool". The original Misfits' versions of "Last Caress" and "Green Hell" were recorded five years apart, and were not recorded together in the same manner that Metallica does.
The band included "The $5.98 E.P." in the title in an effort to ensure that retailers did not overcharge fans. The original cassette release included a sticker stating "If they try to charge more, STEAL IT!" The title of the official United States CD release was amended to "The $9.98 CD", as the retail price of CDs was much higher than cassette; other countries (such as Australia) still displayed "The $5.98 E.P." with a sticker stating that this is the "title" and not the price. "The Wait" was omitted from the UK pressings in order to conform to local music-industry rules regarding the length of EPs.
Though The $5.98 E.P.: Garage Days Re-Revisited has been out of print since 1989 and is considered a collector's item, all five tracks were later included on the 1998 double-album Garage Inc., along with a number of other covers Metallica had recorded throughout its career as well as a collection of entirely new recordings. The cover of the CD also was used as a basis for the Garage Inc. back cover, which shows the original Garage Days cover with pictures of the member's faces, circa 1998, taped over the original faces, along with "Garage Inc." covering the original album name.
In 2018, The $5.98 E.P.: Garage Days Re-Revisited has been re-issued under Metallica's own Blackened Recordings label and is also available in vinyl format.