In 2007, Deschanel appeared in Bridge to Terabithia, in which she played a quirky music teacher, and the animated film Surf's Up, voicing a penguin. She took on the brief role of Dorothy Evans in the revisionist Western The Assassination of Jesse James by the Coward Robert Ford and starred in the B comedy Flakes, which was released in only one theater. Deschanel starred as DG in the Syfy Channel miniseries Tin Man, a re-imagined science fiction version of The Wonderful Wizard of Oz. It aired in December 2007. Deschanel also narrated the children's book Players in Pigtails. She voiced Mary, Cletus's daughter in three episodes of The Simpsons since debuting on the April 27, 2008 episode, "Apocalypse Cow".
In March 2007, Deschanel contributed vocals to two songs "Slowly" and "Ask Her to Dance" on the album Nighttiming by Jason Schwartzman's band Coconut Records. It was reported that Deschanel and M. Ward, who had previously performed with Deschanel on-stage, were recording music under the moniker She & Him. Their first album, titled Volume One, was released by Merge Records on March 18, 2008. It received a strong response from critics, with Paste magazine voting it the No. 1 Album of 2008. Patrick Caldwell of the Austin American Statesman wrote: "The album gently rambled through 13 tracks of sun-dappled pop, with a gentle Orbisonian charm and sweet, wistful vocals from Deschanel."
In 2007, other singing credits followed: the television musical Once Upon a Mattress ("An Opening for a Princess", "In a Little While", "Normandy", and "Yesterday I Loved You"); an old cabaret song in The Assassination of Jesse James by the Coward Robert Ford ("A Bird in a Gilded Cage"); and the short film Raving ("Hello, Dolly!"). Deschanel and the cast of school children sing the Steve Earle song "Someday" and War's "Why Can't We Be Friends?" in Bridge to Terabithia.