Following the positive reception Slayer's previous release Hell Awaits had received, the band's producer and manager Brian Slagel realized the band were in a position to hit the "big time" with their next album. Slagel negotiated with several record labels, among them Rick Rubin and Russell Simmons's Def Jam Recordings. However, Slagel was reluctant to have the band signed to what was at the time primarily a hip hop label. Slayer drummer Dave Lombardo was made aware of Rubin's interest, and he initiated contact with the producer. However, Slayer's remaining members were apprehensive of leaving Metal Blade Records, with which they were already under contract.
Lombardo contacted Columbia Records, which was Def Jam's distributor, and managed to get in touch with Rubin, who along with photographer Glen E. Friedman agreed to attend one of the band's concerts. Friedman had produced Suicidal Tendencies's self-titled debut album, in which Slayer vocalist Tom Araya made a guest appearance in the music video for the album's single "Institutionalized", pushing Suicidal Tendencies's vocalist Mike Muir. Around this time, Rubin asked Friedman if he knew Slayer.
Guitarist Jeff Hanneman was surprised by Rubin's interest in the band, and was impressed by his work with the hip hop acts Run DMC and LL Cool J. During a visit by Slagel to a European music convention, Rubin spoke with the band directly, and persuaded them to sign with Def Jam. Slagel paid a personal tribute to Rubin, and said that Rubin was the most passionate of all the label representatives the band were in negotiations with. Following the agreement, Friedman brought the band members to Seattle for two days of publicity shots, possible record shots, and photos for a tour book; Rubin felt no good photos of the band had been taken before that point. One of the photos was used on the back cover of the band's 1988 release South of Heaven.
The cover artwork was designed by Larry Carroll, who at the time was creating political illustrations for The Progressive, Village Voice, and The New York Times. The cover art was featured in Blender Magazine's 2006 "top ten heavy metal album covers of all time."
Reign in Blood was recorded and produced at Hit City West in Los Angeles with Rubin producing and Andy Wallace engineering. The album was the label boss' first professional experience with heavy metal, and his fresh perspective led to a drastic makeover of Slayer's sound. Steve Huey of AllMusic believed Rubin drew tighter and faster songs from the band, and delivered a cleanly produced sound that contrasted sharply with their previous recordings. This resulted in drastic changes to Slayer's sound, and changed audiences' perception of the band. Araya has since stated their two previous releases were not up to par production-wise.
Guitarist Kerry King later remarked that "[i]t was like, 'Wow—you can hear everything, and those guys aren't just playing fast; those notes are on time.'"
Hanneman later admitted that while the band was listening to Metallica and Megadeth at the time, they were finding the repetition of guitar riffs tiring. He said, "If we do a verse two or three times, we're already bored with it. So we weren't trying to make the songs shorter—that's just what we were into," which resulted in the album's short duration of 29 minutes. King had stated that while hour-long records seem to be the trend, "[y]ou could lose this part; you could cut this song completely, and make a much more intense record, which is what we're all about." When the record was completed, the band met with Rubin, who asked: "Do you realize how short this is?" Slayer members looked at each other, and replied: "So what?" The entire album was on one side of a cassette; King stated it was "neat," as "You could listen to it, flip it over, and play it again." The music is abrasive and faster than previous releases, helping to narrow the gap between thrash metal and its predecessor hardcore punk, and is played at an average of 220 beats per minute.
Lombardo (pictured) on departing Slayer: "I wasn't making any money. I think I had just gotten married, and I figured if we were gonna be doing this professionally—on a major label—I wanted my rent and utilities paid."
Following the album's recording sessions, Slayer embarked on the Reign in Pain tour with the bands Overkill in the United States and Malice in Europe; they also served as the opening act for W.A.S.P.'s U.S. tour in 1987. In late 1986, drummer Lombardo quit the band. To continue the tour Slayer enlisted Whiplash drummer Tony Scaglione.
Rubin called Lombardo daily to insist he return, telling him: "Dude, you gotta come back in the band." Rubin offered Lombardo a salary, but he was still hesitant about returning; at this point Lombardo had been out of the band for several months. Lombardo returned in 1987; Rubin came to his house and picked him up in his Porsche, taking him to a Slayer rehearsal.