"Come Dancing" is a tribute to the Davies' older sister Rene. Living in Canada with her reportedly abusive husband, the 31-year-old Rene was visiting her childhood home in Fortis Green in London at the time of Ray Davies' 13th birthday on which she surprised him with a gift of the Spanish guitar he had tried to persuade his parents to buy him. That evening, Rene, who had a weak heart as a result of a childhood bout of rheumatic fever, suffered a fatal heart attack while dancing at the Lyceum ballroom.
The music video for "Come Dancing" was shot in November 1982 at Ilford Palais in Essex. Ilford Palais was demolished in 2007 to make room for luxury flats, meeting a similar fate to that of the palais described in the lyrics of "Come Dancing."
When first released as a single in United Kingdom in November 1982, "Come Dancing" failed to chart. Although Arista Records founder Clive Davis had reservations about releasing the single in the United States due to the English subject matter of dance halls, the track saw an American single release in April 1983. "Come Dancing" reached number six on the Hot 100, becoming the band's highest US charting single in over a decade and tying with "Tired of Waiting for You" as the band's highest-charting single ever. This success was achieved largely with the help of a promotional music video directed by Julien Temple that saw frequent airing on MTV. As a result of its American success, the single was re-released in Britain. Unlike its first release, the single became a top 20 British hit, reaching number 12.