"Even Better Than the Real Thing" originated from a chorus guitar riff that The Edge composed in Los Angeles during the Rattle and Hum sessions. A demo of the song, called "The Real Thing", was recorded at STS Studios during the same session in which "Desire" was recorded. The band remarked that the song's guitar riff reminded them of The Rolling Stones, but that it sounded "deeply traditional". Consequently, it was shelved until the Achtung Baby recording sessions, when the band took the multitrack recording of the demo to Hansa Studios in Berlin in late 1990. The band made little progress on the demo there, as the Berlin sessions were fraught with conflict and difficulty in completing songs.
The recording sessions, as well as the general mood, improved after the band returned to Dublin in 1991 to record at the "Elsinore" mansion on the Dalkey coastline. The song turned around after The Edge purchased a DigiTech Whammy effects pedal, which created a "double octave sweep" on the guitar riff. The band rediscovered their sense of fun and incorporated that into the writing of the song. Producer Brian Eno originally argued against the song's inclusion on the album when it contained the lyric "There ain't nothing like the real thing", claiming the song had to be "more ironic". After the lyric was revised to "Even better than the real thing", Eno changed his stance and supported the song's inclusion. Lead vocalist Bono explained the song's lyrics, as well as why the title was lengthened to "Even Better Than the Real Thing": "It was reflective of the times [the band] were living in, when people were no longer looking for the truth, [they] were all looking for instant gratification."Richard Branson requested to use the song in advertisements for his "Virgin Cola" to compete with Coca-Cola (who had been using the tagline "the real thing" for years), but the band declined.
The song was performed at every date of the band's Zoo TV and PopMart Tours, and was played sporadically on the Elevation Tour. The "Fish Out of Water" remix, later released in the 20th anniversary edition of Achtung Baby, was played as the opening song during the 2011 legs of the U2 360° Tour.