Amongst the rehearsals and preparations, the Band went into the studio with Bob Dylan to record a new album for Asylum Records that would become the Bob Dylan album Planet Waves (1974). Sessions took place at Village Recorder in West Los Angeles, California, from November 2–14, 1973. Planet Waves was released on February 9, 1974. The album was #1 on the Billboard album charts for four weeks, and spent 12 weeks total in the Billboard Top 40. Planet Waves was Bob Dylan's first #1 album, and the first and only time Bob Dylan and the Band recorded a studio album together.
The 1974 tour began at the Chicago Stadium on January 3, 1974, and ended at The Forum in Inglewood, California on February 14. The shows began with more songs from the new Planet Waves album and with covers that Dylan and the Band liked, but as the tour went on, they moved toward playing older and more familiar material, only keeping "Forever Young" from the Planet Waves album in the set list. Dylan and the Band played a number of tracks from the controversial 1965–1966 World Tour, this time to wildly enthusiastic response from the audience where there had been mixed reaction and boos a mere nine years previously.
The final three shows of the tour at The Forum in Inglewood, California were recorded and assembled into the double album Before the Flood. Credited to "Bob Dylan/The Band", Before the Flood was released by Asylum Records on July 20, 1974. The album debuted at #3 on the Billboard charts, and spent ten weeks in the Top Forty.
Following the 1974 reunion tour with Bob Dylan, rock manager Elliot Roberts booked the Band with the recently reunited Crosby, Stills, Nash, and Young. On September 4, both artists played Wembley Stadium in London, appearing with Jesse Colin Young and Joni Mitchell.
Rehearsals for The Last Waltz concert began in early November. Warner Bros. Records president Mo Ostin offered to finance the production of The Last Waltz film in exchange for the rights to release music from The Last Waltz as an album. However, the group were contractually obligated to supply Capitol Records with one more album before they could be released to work with Warner Bros. So in between rehearsing, the Band worked on the studio album Islands for Capitol. Robertson wrote or co-wrote eight of the ten tracks. One of the songs, "Knockin' Lost John", features Robertson on vocals, and was the first Band song Robertson had sung on since "To Kingdom Come" from Music From Big Pink. "Christmas Must Be Tonight" was inspired by the birth of Robertson's son, Sebastian, in July 1974.
Robertson played guitar for Joni Mitchell on the track "Raised on Robbery", which was released on her album Court and Spark. In 1974, Robertson also played guitar on Carly Simon's version of "Mockingbird", which featured Simon singing with her then-husband James Taylor.