On 1987's Sister, Sonic Youth continued refining their blend of pop song structures with uncompromising experimentalism. Another loose concept album, Sister is partly inspired by the life and works of science fiction writer Philip K. Dick. Sister sold 60,000 copies and received very positive reviews, becoming the first Sonic Youth album to crack the Top 20 of the Village Voice's Pazz & Jop critics poll.
Despite the critical success, Sonic Youth was becoming increasingly dissatisfied with SST due to concerns about payment and other administrative practices. Sonic Youth decided to release their next record on Enigma Records, which was distributed by Capitol Records and partly owned by EMI. The 1988 double LP Daydream Nation was a critical success that earned Sonic Youth substantial acclaim. The album came in second on the Village Voice Pazz & Jop poll and topped the year-end album lists of the NME, CMJ, and Melody Maker. In 2006, it was one of 50 recordings chosen that year by the Library of Congress to be added to the National Recording Registry. The lead single from the album, "Teen Age Riot", was the first song from the band to reach significant success, receiving heavy airplay in modern and college rock stations. A number of prominent music periodicals including Rolling Stone hailed Daydream Nation as one of the best albums of the decade and named Sonic Youth as the "Hot Band" in its "Hot" issue. Unfortunately, distribution problems arose and Daydream Nation was often difficult to find in stores. Moore considered Enigma a "cheap-jack Mafioso outfit" and Sonic Youth began looking for a major label deal.
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