Yorke said it was 'the product of a joke that wasn't really a joke, a very lonely, drunken evening and, well, a breakdown of sorts'. He said the song arose from a melody he had 'no idea what to do with'. Unlike his usual approach of either keeping note 'of whatever my head's singing at the particular moment' or forcing 'some nifty phrases' he devised onto the melody, Yorke said that creating 'Fake Plastic Trees' was the opposite. He said, 'That was not forced at all, it was just recording whatever was going on in my head, really. I mean, I wrote those words and laughed. I thought they were really funny, especially that bit about polystyrene'.

Partly inspired by the commercial development of Canary Wharf.

Guitarist Ed O'Brien described early attempts to record 'Fake Plastic Trees' at London's RAK Studios as sounding 'like Guns N Roses, November Rain, It was so pompous and bombastic'.

When recording sessions for The Bends resumed at Manor Studios in July 1994, producer John Leckie convinced Yorke to record a take of the song. Frustrated at being at the studio for a prolonged period that day, Yorke 'threw a wobbly' in his own description, after which Leckie sent the rest of the band away while Yorke recorded a guide track for 'Fake Plastic Trees' featuring only guitar and the singer's vocals. Yorke performed three takes of the song and then cried afterwards, according to guitarist Jonny Greenwood.

One source of frustration for the band at the time was their US record label, Capitol, which wanted a strong track for American radio to follow the success of their previous hit single, 'Creep'. Surprised that the slow-paced 'Fake Plastic Trees' was seen as a potential single to follow up 'Creep', Yorke ultimately realized the label had remixed the track without his approval: 'Last night I was called by the American record company insisting, well almost insisting, that we used a Bob Clearmountain mix of it. I said 'No way'. All the ghost-like keyboards sounds and weird strings were completely gutted out of his mix, like he'd gone in with a razor blade and chopped it all up. It was horrible'.