The word "picaresque" is taken from a form of satirical prose originating in Spain, depicting realistically and often humorously the adventures of a low-born, roguish hero living by his or her wits in a corrupt society.
The album was recorded at the Prescott Church in northeast Portland, which the band rented for one month in the summer of 2004. To facilitate the creative process and avoid creative block, band members filled a used bike helmet with slips of paper listing strategies and ideas to try out. Non-traditional rock instruments used in the album's recording included an accordion and a hurdy-gurdy. The album was produced by Chris Walla, also the guitarist for the band Death Cab for Cutie.
The album includes the track "Sixteen Military Wives", the music video of which was distributed by the band via BitTorrent. A double vinyl version was released in the United States that contained the album on the first three sides with an EP of outtakes named Picaresqueties on the fourth side. This EP was the band's final release for the Kill Rock Stars label. In Europe, a single-disc vinyl version was released on Rough Trade without the Picaresqueties EP; the fist six tracks appear on Side A, and the final five are on Side B. The Mad Men episode "Maidenform" opened with a montage set to a segment of the song "The Infanta".
Picaresque has a rating of 81/100 on Metacritic, indicating "universal acclaim." The album reached number 5 on the Billboard Heatseekers chart, and number 128 on the Billboard 200.Pitchfork Media placed Picaresque at number 143 on their list of top 200 albums of the 2000s.