This was the first Rush album to feature drummer Neil Peart. In addition to drumming duties, Peart also took on the job of lyricist by default, leading the band to adopt a more literary lyrical style that differed significantly from their self-titled debut album. The songs "By-Tor & the Snow Dog" and "Rivendell" are examples of the inclusion of fantasy themes into Rush's music.
"By-Tor & the Snow Dog" was inspired by Rush roadie Howard Ungerleider's story of him staying at Anthem records manager Ray Danniels' house, where Danniels' German Shepherd growled at him, and a tiny dog also owned by Danniels tried to jump on him. Ungerleider told Rush about it and they thought it was hilarious.
"Anthem" features lyrics inspired by elements of the philosophy of Ayn Rand, whose influence on Peart's writing would reach its apogee on Rush's 1976 album 2112. The autobiographical title track is based on Peart's experience of briefly moving from Canada to London as a young musician (before joining Rush). The original hand-penned lyrics for both "Anthem" and "Fly by Night" include different or additional lyrics not sung in the original songs. The original lyrics to "Fly by Night" include a prologue which is not found in the final song.
The song "By-Tor & the Snow Dog" at the end of side one of the original LP has a recording of jingle sounds which continues into the locked groove and thus plays indefinitely on manual record players.
Fly by Night was recorded at Toronto Sound Studios on Overlea Boulevard in Toronto. Rush also recorded parts of their first album at the same studio. Since the first album sessions, the studio had upgraded its equipment from a Cadac console with an Ampex MM-1000 two-inch 16-track and a MM-1000 8-track, to a two-inch analog 24-track master tape recorder. Pictures shown on the album artwork indicate that the studio used a 24-track recorder made by Studer and a Neve mixing console, a combination that was widely considered to be state-of-the-art by audio engineers. These were the preferred brands by many top studios worldwide up through the mid-1990s when digital recording equipment became the standard. Fly by Night is the band's first album to be produced by Terry Brown, who had remixed the band's debut album. Brown would maintain this role through 1982's Signals. The high fidelity recording of Fly by Night helped move the band forward in a direction that piqued the interest of audiophiles, who would seek out this type of recording while also getting familiar with the band's material. It set an early standard of excellence in this area not often prioritized by the harder rock bands of the mid-1970s rock era.
A remaster was issued in 1997. It was remastered again in 2011 by Andy VanDette as part of the three-volume "Sector" box sets, which re-released all of Rush's Mercury-era albums. In addition to the standard audio CD, the album was also included on an audio DVD in the Sector 1 set, remixed into 5.1 surround sound.