Grinderman had been put on hold due to several members' involvement on Nick Cave and The Bad Seeds' fourteenth studio album, Dig, Lazarus, Dig!!!, in 2008. After the Nick Cave and the Bad Seeds summer tour in 2008, the band began recording the album in various studios throughout London. Speaking to XFM, Cave noted that the album "will feature a totally different sound" and plan to "do it a more serious way this time"; he remarked that he did not plan for the album to receive commercial success.
Recording was completed in August 2009—a year after the original sessions—production was completed in April 2010 at Seedy Underbelly in Los Angeles, and the album was produced by Nick Launay, a friend of the band, who had also produced Grinderman's self-titled debut, with additional production by the members of the band. In an interview with The Quietus in September 2009, Warren Ellis confirmed that Grinderman 2 was completed. Ellis also described the album as "like stoner rock meets Sly Stone via Amon Düül", "very diverse", and "psychedelic." The album was released in September 2010, in a regular and a deluxe edition, the latter containing a 52-page booklet (illustrations by Ilinca Höpfner) and a poster (photography by Polly Borland).
Grinderman 2 received mostly positive reviews, with some critics finding the album as superior to its predecessor, Grinderman, and holds an 83 score on Metacritic, denoting "universal acclaim." Thom Jurek of AllMusic said it was a "more polished and studied affair than its predecessor" and "more sonically adventurous" while still being a "white-hot rock and roll record." It has been described as "full of nightmares, but nightmares worth repeating." Garry Mulholland of BBC Music said that Grinderman 2 had a "fuller sound, influenced as much by 60s garage punk and droning Krautrock as the blues."