The very first new recording Black Sabbath made after the Heaven and Hell album was a version of the title track "The Mob Rules" for the soundtrack of the film Heavy Metal. The track "E5150" also is heard in the film but is not included in the soundtrack. According to guitarist Tony Iommi's autobiography Iron Man: My Journey Through Heaven & Hell with Black Sabbath, the band began writing and rehearsing songs for Mob Rules at a rented house in Toluca Lake in Los Angeles. Initially the band had hoped to record in their own studio to save money and actually purchased a sound desk but, according to Iommi, "We just couldn't get a guitar sound. We tried it in the studio. We tried it in the hallway. We tried it everywhere but it just wasn't working. We'd bought a studio and it wasn't working!" The band eventually recorded the album at the Record Plant in Los Angeles.
Mob Rules was the first Black Sabbath album to feature Vinny Appice on drums, who had replaced original member Bill Ward in the middle of the tour in support of the previous year's Heaven and Hell. Asked by Joe Matera in 2007 if working with a new drummer was jarring after so many years, Butler replied, "No, because Vinnie was a big fan of the band and loved Bill's playing. Bill was one of his favorite drummers and so he knew all his parts and my bass parts and he adjusted accordingly to everybody in the band. He was brilliant. He came in and totally filled in Bill's shoes."
In an interview for the concert film Neon Nights: 30 Years of Heaven and Hell, Butler cites "The Sign of the Southern Cross" as his favorite Mob Rules track because "it gave me a chance to experiment with some bass effects." The album was the last time the band worked with producer and engineer Martin Birch, who went on to work with Iron Maiden until his retirement in 1992. Iommi explained to Guitar World in 1992, "We were all going through a lot of problems at that time, most of it related to drugs. Even the producer, Martin Birch, was having drug problems, and it hurt the sound of that record. Once that happens to your producer, you’re really screwed."
Mob Rules would be singer Ronnie James Dio's second and final studio recording with Black Sabbath until the Mob Rules-era lineup reunited in 1992 for Dehumanizer. The seeds of discontent appear to have sprouted when Dio was offered a solo deal by Warner Brothers, with Iommi stating in his memoir, "After the (Heaven and Hell) record became such a great success, Warner Brothers extended the contract at the same time, offering Ronnie a solo deal. That felt a bit odd to us, because we were a band and we didn't want to separate anybody." Dio confided in an interview on the Neon Nights: 30 Years of Heaven and HellDVD that the recording of Mob Rules was a far more difficult process for him than Heaven and Hell had been because "we approached the writing very much differently than the first one. Geezer had gone so we wrote in a very controlled environment in a living room with little amplifiers and with Mob Rules we hired a studio, turned up as loud as possible and smashed through it all. So it made for a different kind of an attitude".
Iommi reflected to Guitar World in 1992, "Mob Rules was a confusing album for us. We started writing songs differently for some reason, and ended up not using a lot of really great material. That line-up was really great, and the whole thing fell apart for very silly reasons — we were all acting like children." The major problem, noted by Mick Wall in his book Black Sabbath: Symptom of the Universe, was that the balance of power within the band had shifted: "With Bill and Ozzy happy to leave the heavy lifting to Tony and Geezer, in terms of songwriting, coming into the studio only when they were called, even as their flair deserted them over the final, dismal Ozzy-era albums, at least everybody knew where they stood. Now, though, the creative chemistry had shifted."
The cover art is a modified version of artist Greg Hildebrandt's piece entitled Dream 1: Crucifiers from 1971, with Black Sabbath licensing its use for the cover of Mob Rules. Some fans claim the name 'Ozzy' was spelled out on the album cover, something Iommi dismisses as "rubbish" in his autobiography: "There was a little controversy about some stains on the floor in the picture. According to some people it spelled out 'Ozzy'. Somebody mentioned it to us and we went: 'What?'...I never noticed anything and I still wouldn't know where to find it."
Mob Rules was released on November 4, 1981 to mixed reviews. In the U.S. it went gold and in the U.K. it reached the Top 20 and spawned two chart singles, the title track and "Turn Up the Night." AllMusic's Greg Prato calls the album "underrated" and enthuses, "Mob Rules was given a much punchier, in-your-face mix by Birch, who seemed re-energized after his work on New Wave of British Heavy Metal upstarts Iron Maiden's Killers album. Essentially, Mob Rules is a magnificent record, with the only serious problem being the sequencing of the material, which mirrors Heaven and Hell's almost to a tee." Iommi acknowledged this common criticism in his memoir, admitting that he was frustrated at being accused of making Heaven and Hell part two' and speculating that the band would have been criticized regardless of their approach. Appraising the album in the February 1986 edition of Rolling Stone, writer J.D. Constantine trashed Mob Rules. Profiling the album in 2008, Bryan Reesman noted, "Even with Dio bringing in more fantasy-based lyrics, and moving the group away from seemingly Satanic verses, the title track to Mob Rules, not to mention its menacing cover, could easily imply a call to anarchy. But beyond the snarling guitars and vocals is actually a cautionary tale against mindless mayhem."