Nirvana was released following the settlement of a long-standing legal dispute between Cobain's widow, Courtney Love, and surviving Nirvana members Krist Novoselic and Dave Grohl. Much of the dispute centered around the song "You Know You're Right" which was recorded during the band's final studio session, in January 1994. Novoselic and Grohl had wanted to release it on a long-delayed Nirvana rarities box set. However, Love blocked the song's release, and sued Novoselic and Grohl over control of Nirvana's legacy. Love's lawsuit maintained that "You Know You're Right" was a "potential 'hit' of extraordinary artistic and commercial value." She believed that "You Know You're Right" would be "wasted" on a box set, and instead belonged on a single-disc compilation similar to The Beatles' 1. In September 2002, it was announced by the Nirvana camp that the lawsuit had been settled, and that "You Know You're Right" would be released on "Nirvana, a one-CD history of the band."
Nirvana was the third Nirvana album to be released following the death of singer/ guitarist Kurt Cobain in April 1994, and the first to feature studio material. The first track on the album is "You Know You're Right" which was also released as a downloadable single. The only song to appear from Nirvana's 1989 debut album Bleach is "About a Girl". Bleach producer Jack Endino saw "About a Girl" as a potential single and the song was later released as a single from the MTV Unplugged in New York album in 1994. The song "Been a Son" was originally a B-side from Nirvana's 1989 BlewEP, which itself was only a limited release in the United Kingdom, making the song a rarity. Nirvana's 1990 non-album single "Sliver" which was their last Nirvana only release on the Sub Pop label is the fourth track on the album.
The four commercially released singles from 1991's Nevermind album ("Smells Like Teen Spirit", "Come as You Are", "Lithium" and "In Bloom") are all included, as are three singles from 1993's In Utero album ("Heart-Shaped Box", "Pennyroyal Tea" and "Rape Me"). The version of "Pennyroyal Tea" that is included is a remixed version which was planned as a single in March 1994 from the In Utero album, however due to Cobain's death the single was recalled shortly after its release making this remixed version rare and hard to find until its inclusion on Nirvana. Also included is "Dumb" which was an album track from In Utero.
Several critics believed that Nirvana was too brief, and omitted key tracks. Stephen Thomas Erlewine of AllMusic wrote that "the presence of a few more tracks, along with placing "You Know You're Right" at the end where it belongs, would have made this collection not just stronger, but possibly definitive. As it stands, it feels like a bit of a cheap compromise and a wasted opportunity." Will Bryant of Pitchfork praised the album as "an artful selection of the band's most seminal material," but also dismissed it as "a party mix for parents who want to appreciate Cobain's Lennon-esque knack for great melodies without having to click past "Scentless Apprentice" or "Territorial Pissings"...utterly inoffensive: an impulse buy from Columbia House, perhaps, with no more artistic value than The Eagles'Greatest Hits or the Beatles'1."