Initially starting at a meal between Roy Orbison, George Harrison, and Jeff Lynne, they got together at Bob Dylan's studio at Santa Monica, California to record an additional track as a B-side for the single release of Harrison's "This Is Love". Tom Petty's involvement was by chance as Harrison had left his guitar at Petty's house. The song they came up with was "Handle with Care". However, the record company immediately realized it was too good to be released as a "single filler".
They enjoyed working together so much that they decided to create an album together. Written by all its members, the album was recorded over a ten-day period in May 1988 because Dylan was due to go on tour. Released on October 18, 1988 (under various pseudonyms as half-brothers, supposed sons of Charles Truscott Wilbury, Sr.), the album Traveling Wilburys Vol. 1 was in 1989 ranked #70 on Rolling Stone magazine's list of the 100 greatest albums of the 1980s. It was later nominated for a Grammy under the category Album of the Year. The death of band member Roy Orbison (on December 6, 1988) prevented further full collaborations; however, the band continued without him. The band even finished the video for "End of the Line". In the scene where the verse is sung by Orbison, the viewer is shown Orbison's guitar in a rocking chair followed by a photo of the late artist.
"Wilburys" was a slang term coined by Harrison and Lynne during the recording of Cloud Nine as a reference to recorded "flubs" that could be eliminated during the mixing stage (i.e. "'We'll bury' them in the mix"). The term was used again when the entire group was together. Harrison suggested "The Trembling Wilburys" as the group's name, but Lynne suggested using "Traveling" instead. Everyone agreed.