The name of the album came from a conversation the band had regarding shockpunk singer GG Allin. Allin claimed he would commit suicide while on tour and wanted his corpse to be shown at the remainder of the shows on the schedule. Furthermore, he wanted the fans to be able to throw objects at his deceased body. The band joked that if he did, the corpse would be like a "rotting piñata."
Rotting Piñata received mostly positive reviews. Allmusic's Stephen Thomas Erlewine gave it three stars out of five and said that "Sponge's sense of alternative rock goes back as far as Pearl Jam, or maybe only Stone Temple Pilots, judging from the hit single 'Plowed.' For an STP ripoff band, they're very adept -- the chords cluster together, vocalist Vinnie sings directly from his gut, and the whole thing barrels ahead, ignoring whatever's in its way."
Rotting Piñata is one of Sponge's most successful albums to date and their only album to be certified gold by the RIAA. Although released in August 1994, the album did not enter the Billboard 200 until May 1995, following the success of its first single "Plowed". Rotting Piñata peaked at number 58 and remained on the chart for 40 weeks.
The vocals for "Molly" were re-recorded for the single release, retitled "Molly (16 Candles Down the Drain)" The song was inspired by a story a bandmember had heard about a 16-year old girl who'd fallen in love with her teacher and attempted suicide after he rejected her advances.