Like many of their stable-mates, the band hailed from the southern city of Dunedin. They formed from the ashes of The DoubleHappys, a band comprising Shayne Carter, Wayne Elsey and John Collie. The tragic accidental death of Elsey saw Carter and Collie join forces with David Wood in 1986 to form Straitjacket Fits. Andrew Brough (from The Orange) signed on the following year, adding a foil in the form of pop sensibility to Carter's more raucous songwriting. From their inception, the sound of the band was marked by the seemingly incongruous but highly effective pairing of Carter's rough abrasive voice and strident guitar and Andrew Brough's saccharine-sweet vocals and pop hooks.
The band left Dunedin, briefly moving to Christchurch, before making the shift to the country's main marketplace, Auckland in 1988. Their first album Hail was produced by Terry Moore (a former member of The Chills) and was released later that year.