The production of the single was troublesome. Morrissey's original idea was to bring back Sandie Shaw to be a second vocalist on the track. Shaw had earlier collaborated with The Smiths on two tracks in 1984—re-recordings of "Hand in Glove" and "I Don't Owe You Anything". However, when Shaw arrived to record with The Smiths on 13 December 1986, Morrissey called in sick. Shaw was a bit "frantic", according to Mike Joyce, and she had to call up Morrissey to get the song's melody. She recorded her vocals, but her version was ultimately scrapped. She also later explained that she "thought it was a horrid song", and scoffed at the notion of being a backing singer.
The early version of the track, produced by John Porter, was deemed unsatisfactory by the band. It featured a prominent sitar-sounding riff and can be found on many "unreleased/demo" bootleg compilations. The single was re-recorded with Stephen Street as producer. Street's version scrapped the sitar and used a brief audio clip of a marching temperance band from the film Hobson's Choice in the song's intro. A music video was to be filmed, but Morrissey refused to show up for the taping at Brixton Academy.
It was one of the band's many "between album" singles (the last of four in a row), not having natural home on any of the studio albums. It was, however, featured on the Louder Than Bombs compilation released later in the year.
The single's two B-sides, Peel Session versions of "Is It Really So Strange?" and "Sweet and Tender Hooligan", are also featured on Louder Than Bombs.
A German CD was issued with the tracks from the UK 12" as well as "Panic" and the tracks from the UK 12" for previous single "Shoplifters of the World Unite". The seven tracks on this CD make up the first seven tracks on Louder Than Bombs.
"Sheila Take a Bow" was only performed live twice by The Smiths, having the distinction of being the last song ever played by the group in front of an audience. It was performed live on the British music program The Tube on 10 April 1987, and on Top of the Pops on 23 April 1987 (although the band were miming to the studio version for this performance). Morrissey performed this song live for the first time on 14 March 2012 in Lima, Peru.