The Live Evil album was recorded on the Mob Rules tour. The sleeve states that the songs were recorded in Seattle, San Antonio and Dallas during the 1982 tour in support of the Mob Rules album, but doesn't give the venues or recording dates for the individual tracks. In his autobiography Iron Man: My Journey Through Heaven & Hell with Black Sabbath, guitarist Tony Iommi recalls that the band's live show during this period featured "lots of pyro with fire and bombs" and that while playing the Hammersmith Odeon the bombs had been tested and "blew a two-foot-wide hole in the floor on my side. If I'd been there, I would have been blown up. Christ, it was dangerous." Iommi also admits that the band had to cancel a show at Madison Square Garden when the bombs blew out the tubes in all the amps during the first note of the first song "War Pigs". In the liner notes to the 2008 retrospective The Rules of Hell, vocalist Ronnie James Dio remembers, "It was an excellent tour. I think we were probably riding quite high on the Heaven and Hell success, and so we ended up playing really, really well. Even towards the end the shows were still great." However, tension had been building for some time between the band members, with Steffan Chirazi observing in 2008 that the story behind the creation of Live Evil is one of "quiet yet savagely visceral turmoil and a band collapsing under their weight of silence, unspoken accusation, and an unforgiving schedule."
Dio and drummer Vinny Appice abruptly left the group during the mixing of Live Evil. "Ronnie had started to take over a little bit too much and was becoming a bit of a Hitler," Iommi explained to Steve Gett of Guitar for the Practicing Musician. "We were working on the Live Evil record in Los Angeles, and in fact we nicknamed him 'Little Hitler.'" In 2011, Iommi was less harsh in his memoir: "By then Ronnie did come over a little more...I suppose, bossy. The way he conducted himself, the way he talked, it might have given that impression to the outside world, but he usually didn't mean anything by it. Ronnie was just very outspoken." Iommi also contends that he and bassist Geezer Butler were unhappy that Dio was already rehearsing with his own band for a solo album that Warner Brothers had offered him. Dio and Appice bolted after the album's engineer told Iommi that Dio had been sneaking into the studio at night to adjust the mix. Dio steadfastly denied that this ever occurred and laid the blame on the engineer, who was 'telling tales'. On the Neon Nights: 30 Years of Heaven and Hell DVD, both Dio and Appice claim that the mixing sessions were scheduled to start in the early afternoon but on the third day Iommi and Butler didn't show up until much later, and this ongoing schedule exacerbated the already apparent rift between the new and original band members until the singer was asked to leave. Dio also insisted the idea of him secretly altering the mixes was "complete and total bullshit." In the same interview series, Butler described the Live Evil mixing sessions as "the Yanks against the Brits," adding, "I think Ronnie seemed to desperately want to do his own stuff and we sort of wanted to keep it going as it was." In the liner notes to The Rules of Hell, Appice states, "I knew things were coming to a close from some of the things that were happening on the road. Ronnie and I would ride in one car, Geezer and Tony in another car, and everybody was breaking away from each other a little bit." In Mick Wall's 2013 biography Black Sabbath: Symptom of the Universe, Dio reflects, "Eventually Geezer phones me and says, 'I don't think this is working out. We really want Tony to produce the album on his own.' Now I know this cryptic talk, so I say, 'So if you don't want me involved with this album are you saying it's over then?' And Geezer says, 'Well, er...yeah, I suppose so.' They could never just tell you straight. It was all a device to force me out."
Iommi has said that the decision to release Live Evil was prompted by two factors. The first was the 1980 release of the unsanctioned Live at Last album, and the second was former lead vocalist Ozzy Osbourne's 1982 release of a live album consisting entirely of Black Sabbath songs. In his autobiography, Iommi confesses that he was "unpleasantly surprised" that Osbourne had included only Sabbath songs and speculates that "I think putting out the live album like that was down to Sharon (Osbourne, Ozzy's wife and manager), trying to put the cat among the pigeons." At the time, Sharon was severely at odds with her father Don Arden, who was managing Sabbath and was attempting to steer Osbourne away from his deal with Arden's label Jet and on to a new deal with Jet's distribution company CBS. "We had to give the old man two albums, well, a live album counted as two," she is quoted as saying in Mick Wall's 2013 biography on the band. "I knew he'd go for it because it wouldn't cost anything to make...But Don was expecting something with Randy (Rhoads) on it and I just thought fuck that. I'm not giving him that. He can have something with a load of old Sabbath shit on it."
Despite the rancor, Live Evil hit both the UK Top 30 and the US Top 40 Album charts. AllMusic states that "Live Evil does benefit from a crystal clear, in-your-face sound, and by showcasing even amounts of both Ozzy and Dio material, effectively documents Black Sabbath's renascent tours of the early '80s. Ronnie certainly has the vocal chops, if not the same everyman charm, to handle the Osbourne classics, but his incessant banter between (and during!) songs sometimes verges on the unbearable." The album is included in the Black Sabbath box set The Rules of Hell. and in the liner notes the album is described as "up-front and aggressive, a virtual front row seat dynamically delivering renditions of cuts like 'Neon Knights' and 'The Sign of the Southern Cross/Heaven and Hell' straight into your ears." The Live Evil album cover features literal interpretations of Sabbath songs and reflects the material, which covers both the Dio and Ozzy eras.
The UK cassette release had, as its first side, sides 1 and 3 of the vinyl release, with side two of the cassette being vinyl sides 2 and 4. It seems this was not a mistake, rather a money-saving exercise, since the running-times of the two sides of the tape were more-or-less equal in this configuration.
The first UK CD release omitted "War Pigs" (or "Warpigs" as it was titled in the explanation for its cutting, printed on the rear of the tray-insert), so as to fit onto a single CD. The 1996 UK remaster restored this track but cut much of the stage banter, so as to again fit onto a single CD: this reduced the 'live' feel of the recordings.
In the US Warner Brothers released a 2-CD set, which matched the running-order of the vinyl. Each of these WB CDs came in its own jewel-case, complete with artwork, rather than a 2CD jewel-case.
Universal Music Corporation released a "deluxe edition" worldwide in 2010 which contained the entire album in its original running order.