The album was announced on August 16, 2007, following months of fevered recording speculation, and weeks of equally fevered release speculation, among the Springsteen faithful.

Of the album's tracks, "Long Walk Home" had been previously heard once, late on the 2006 Sessions Band Tour; the rest were new. Most of those were written by the end of 2006; Springsteen allowed producer Brendan O'Brien (returning for a role he had for The Rising and 2005's Devils & Dust) to pick the ones that worked the best.  Recording began at Southern Tracks Recording Studio in Atlanta over a period of two months beginning March 2007.  It was complicated by the band members' schedules, and especially drummer Max Weinberg's weekday commitments to taping Late Night with Conan O'Brien.  The band did not record as a unit: rather, during the week Springsteen worked on vocal tracks and production; on weekends the core band of Weinberg, bassist Garry Tallent, and pianist Roy Bittan flew down to record the basic tracks with Springsteen. Then periodically the other band members were called in as needed to overdub their parts under producer O'Brien's watch. Only saxophonist and longtime foil Clarence Clemons was given different treatment, with O'Brien handing the studio over to Springsteen for recording of sax parts due to "a whole dynamic [between the two of them] that spans decades."

Upon its announcement, Magic was characterized by Springsteen's manager Jon Landau as a "high energy rock" album, with a "heavy E Street Band" sound.  The initial track, "Radio Nowhere", was slated as the album's first single, for release to radio on September 4, 2007; however, it leaked to the Internet on August 22, 2007. The release of the CD form of the album on October 2, 2007 was preceded by a September 25, 2007 release on vinyl record, in order to qualify the album for the Grammy Awards of 2008 before the end-of-September cutoff.