"How Could Hell Be Any Worse?" was recorded over two time periods at Track Record Studios in North Hollywood, California, during October–November 1980 and again in January 1981. After the original recording sessions, drummer Jay Ziskrout left Bad Religion and was replaced by his friend and the band's roadie Pete Finestone, who was brought in to complete the rest of the album. Though not yet credited as a member of the band, future guitarist Greg Hetson, who was in Circle Jerks during this time, provided a guitar solo on "Part III". "How Could Hell Be Any Worse?" was also Bad Religion's last album featuring Jay Bentley on bass for six years, until 1988's "Suffer".