Hailing from Romford, UK Karl Hyde and Rick Smith started out in 1983 as members of quirky new-wave pop band Freur. Freur became Underworld in 1986 and in 1988 the band struck chart success with single Underneath The Radar and had a minor hit in the US with Stand Up . This initial lineup consisted of Hyde, Smith, Alfie Thomas, Bryn Burrows, Baz Allen and Pascal Consoli before sinking back into obscurity and disbanding in 1990.

British DJ Darren Emerson hooked up with Hyde and Smith in 1992 and helped them refine their sound into something more sleek and beat-oriented, yet still shot through with tinges of blues, rock and spoken-word streams of consciousness. After several releases on Junior Boy's Own as Lemon Interupt, the trio re-adopted the Underworld name. Their first full-length, Dubnobasswithmyheadman, was released in 1994 to rave reviews and is still considered a landmark. It spawned several hit singles (Dark & Long, Cowgirl, Dirty Epic) and was followed a couple years later by the Born Slippy single and sophomore album Second Toughest in the Infants. Underworld's much-praised remixography also grew, including Björk, Saint Etienne, Simply Red, Massive Attack and Leftfield.

Their song Rez was the inspiration for the title of the 2001-2002 videogame with the same name.

After licensing out a remix of Born Slippy for the 1996 cult classic film Trainspotting, Underworld gained instant worldwide fame and found themselves touring the world. Their fame continued to run high into the release of Beaucoup Fish (1999) and live set Everything, Everything (2000), after which time Emerson left the group to concentrate more on his DJ career. The album A Hundred Days Off followed in 2002.

In addition to their music, Hyde and Smith are members of Tomato, a graphic design company which has done high-profile work for clients around the world as well as art for all of Underworld's releases. Hyde, along with former Freur keyboardist John Warwicker, has also published two typographic journals, Mmm... Skyscraper, I Love You (1994) and In The Belly Of Saint Paul (2003).

Since 2003 the group has been trickling out new music on their official website www.underworldlive.com via a series of downloadable mp3s dubbed "The Riverrun Project". Each mp3 bundle features 25-or-so-minute of mixed new material, hundreds of photographs and traditional album art.

Oblivion With Bells, their fifth studio album was released in October 2007, the first in collaboration with Darren Price who joined the band in 2005.