Brian Wilson claims that he and Van Dyke Parks wrote the song along with "Heroes and Villains" "Cabin Essence" and "Surf's Up" in a giant sandbox with a piano in it that Wilson had built in his living room. The original version was based around a harpsichord rhythm recorded on November 1966 (with numerous bootlegs documenting Wilson's attempts at recording the basic harpsichord track on his own). The harpsichord track was then mixed with some horn overdubs together with a bass, both entering in the second verse. A recording session featuring only Brian and Al Jardine was held in January 1967 in which they recorded the backing vocals. Afterwards, Brian recorded the lead vocal on his own.
An outtake from sometime around this session, "He Gives Speeches" (a composition from the male perspective), is argued as a short break that was supposed to be inserted between the second and third verse of "Wonderful", keeping in tune with Wilson's concept of using "modular" techniques done throughout the entire album (as evidenced in the band's earlier breakthrough, "Good Vibrations"), as well as tying up with the similar theme of sexual awakening. Due to it being branded as an outtake, it is obvious that Wilson was not able to splice "He Gives Speeches" to the main song.
Another recording took place a few months after, with Carl Wilson on lead vocals and Brian on backup. This version is radically different from the first version, as it features a jazzed-up arrangement accompanied by scat singing. This recording is known as the "Rock with Me, Henry" version due to the scatting of the phrase "Pretty baby/Won't you rock with me, Henry?" repeated all over again until it takes over majority of the song. Wilson also recorded an unusual group vocal collage in order to splice it between the verses, similar to his earlier attempt with the "He Gives Speeches" segment, but (just like the first version) never got around to linking the two compositions together.
The Smiley Smile version contains sustained organ chords as nearly the only accompaniment. It also includes an interlude not found on the original version, but was a concept salvaged from his initial idea of the song. The interlude is based upon a recording Brian made in April 1967 which would act as a fading coda to the song "Vega-Tables". "Vega-Tables" would itself be re-recorded without the coda on Smiley Smile. The "He Gives Speeches" piece made its way to this album, albeit as an individual track, in the form of the re-written and re-recorded "She's Goin' Bald".
Author Andrew Hickey wrote of the song, "If there was any justice in the world, this song would now be regarded as every bit the classic that God Only Knows is, as on every level that matters – musical and lyrical sophistication, beauty, the compassion that pours out of every syllable of the song – this is the superior of that song and almost every other I've heard."
In 2011 Mike Love commended Parks' "marvellous job" with the lyrics and has described the piece as beautiful and sensitive, possessing ability to move listeners to tears. He told Goldmine magazine "‘Wonderful’ is an amazing, amazing piece of work. Holy shit! Van Dyke and Brian did a great collaboration on that one. It’s a really beautiful song. That’s probably my favorite thing from the Smile project.”
The 2004 version was completed and performed with the rest of the finally completed Smile songs, live in February 2004 by Brian Wilson and his band, including members of the Wondermints with prior Beach Boys guitarist/vocalist Jeff Foskett. A studio version of the Smile arrangement was subsequently recorded and included on the Smile studio album when it was released later in 2004. The song was released as a limited 7" single backed with "Wind Chimes" totaling 5,000 copies on blue, green, and yellow vinyl. In the 2004 version, "Wonderful" is linked thematically with the second suite which also included "Child Is Father of the Man" and "Surf's Up".