In March 1967, Stax released King & Queen, an album of duets between Redding and Carla Thomas, which became a certified gold record. It was Jim Stewart's idea to produce a duet album, as he expected that "[Redding's] rawness and [Thomas's] sophistication would work". The album was recorded in January 1967, while Thomas was earning her M.A. in English at Howard University. Six out of ten songs were cut during their joint session; the rest were overdubbed by Redding in the days following, because of his concert obligations. Three singles were lifted from the album: "Tramp" was released in April, followed by "Knock on Wood" and "Lovey Dovey". All three reached at least the top 60 on both the R&B and Pop charts. The album charted at number 5 and 36 on the Billboard Pop and R&B charts, respectively.
In 1967, Redding performed at the influential Monterey Pop Festival as the closing act on Saturday night, the second day of the festival. He was invited through the efforts of promoter Jerry Wexler. Until that point, Redding was still performing mainly for black audiences. At the time, he "had not been considered a commercially viable player in the mainstream white American market." But after delivering one of the most electric performances of the night, and having been the act to most involve the audience, "his performance at Monterey Pop was therefore a natural progression from local to national acclaim,...the decisive turning-point in Otis Redding's career." His act included his own song "Respect" and a version of the Rolling Stones' "Satisfaction." Redding and his backing band (Booker T. & the M.G.'s with the Mar-Keys horn section) opened with Cooke's "Shake", after which he delivered an impulsive speech, asking the audience if they were the "love crowd" and looking for a big response. The ballad "I've Been Loving You" followed. The last song was "Try a Little Tenderness", including an additional chorus. "I got to go, y'all, I don't wanna go", said Redding and left the stage of his last major concert. According to Booker T. Jones, "I think we did one of our best shows, Otis and the MG's. That we were included in that was also something of a phenomenon. That we were there? With those people? They were accepting us and that was one of the things that really moved Otis. He was happy to be included and it brought him a new audience. It was greatly expanded in Monterey." According to Sweet Soul Music, musicians such as Brian Jones and Jimi Hendrix were captivated by his performance; Robert Christgau wrote in Esquire, "The Love Crowd screamed one's mind to the heavens."
Before Monterey, Redding wanted to record with Conley, but Stax was against the idea. The two moved from Memphis to Macon to continue writing. The result was "Sweet Soul Music" (based on Cooke's "Yeah Man"), which peaked at number 2 on the Billboard Hot 100. By that time, Redding had developed polyps on his larynx, which he tried to treat with tea and lemon or honey. He was hospitalized in September 1967 at Mount Sinai Hospital in New York to undergo surgery.
Redding's music made him wealthy. According to several advertisements, he had around 200 suits and 400 pairs of shoes, and he earned about $35,000 per week for his concerts. He spent about $125,000 in the "Big O Ranch." As the owner of Otis Redding Enterprises, his performances, music publishing ventures and royalties from record sales earned him more than a million dollars in 1967 alone. That year, one columnist said, "he sold more records than Frank Sinatra and Dean Martin combined." After the release of Otis Blue, Redding became a "catalogue" artist, meaning his albums were not immediate blockbusters, but rather sold steadily over time.
By 1967, the band was traveling to performances in Redding's Beechcraft H18 airplane. On December 9, they appeared on the Upbeat television show produced in Cleveland. They played three concerts in two nights at a club called Leo's Casino. After a phone call with his wife and children, Redding's next stop was Madison, Wisconsin; the next day, Sunday, December 10, they were to play at the Factory nightclub, near the University of Wisconsin.