Peter Jackson discovered Sheeran through his daughter Katie in early 2013, and then met him while he was touring in New Zealand, when searching for an artist to record the end-credit of The Desolation of Smaug, Peter Jackson and producer/co-writer Fran Walsh decided, following the advice of their daughter, to ask him to write and perform the song. The Hobbit was the first book Sheeran ever read, and he was a fan of both Tolkien's and Jackson's work.
In only one day, Sheeran watched the film at Park Road Post, immediately went to a room to write the song, and recorded most of it. Despite having never played the violin, he chose to perform it himself via overdubbing. Sheeran commented on the production stating, "I got the chance to produce and play all the instruments on it apart from the cello (... and I) managed to learn (the) violin for a day".Flight of the Conchords' touring cellist Nigel Collins added cello parts, dictated by Sheeran. Pete Cobbin from Abbey Road Studios, responsible for mixing the musical score of The Desolation of Smaug by Howard Shore, was at Park Road at the same time and mixed "I See Fire", with Jackson being present during the whole recording.
Since its release on 5 November 2013, "I See Fire" has been listed for 159 weeks in 19 different charts. Its first appearance was on 7 November in the Ireland Singles Top 100, where it debuted at number 22.
In New Zealand, the song debuted at number 7 peaking at number 1 on the RIANZ chart. The song was certified triple platinum by the Recorded Music NZ (RMNZ), denoting sales of 45, 000 copies, and has gone on to became a sleeper hit, and has so far spent 35 weeks in the top 40. The song proved to be successful in many European countries, with a peak position of number 1 in Norway and Sweden. "I See Fire" also saw success in the Philippines, reaching number 1 in the charts.
The official music video for "I See Fire" premiered on 5 November 2013, along with the release of the song. The video shows Sheeran during the production of the song and Sheeran performing the song, as well as shots of the film. Peter Jackson stating, "it was a great experience, and what you will see in this video are moments captured by our behind the scenes team during the creation of the song".