"Dancing with the Moonlit Knight" evolved from a number of short piano pieces composed by Gabriel, which was combined with some of Hackett's guitar figures to make up the track. Gabriel added English-themed lyrics to counter the impression from the music press that Genesis were trying too hard to appeal to the American audience, including references to Green Shield Stamps. Banks had upgraded to a new model of Mellotron and used the choir sound on the track. The track ends with a series of 12-string guitar figures that were originally supposed to segue into "The Cinema Show" to make a piece around 20 minutes in length, but this idea was dropped as the result was too comparable to the 23-minute "Supper's Ready" on "Foxtrot". Its original working title was "Disney". Rutherford thought the song's opening provided a good start to the album, but felt less enthusiastic towards it overall, calling it "a bit busy".