Figure 8

Figure 8 was recorded between 1998 and 2000 at Sunset Sound and Capitol Studios in Hollywood, Sonora Studios in Los Angeles and Abbey Road Studios in London. It was first called Place Pigalle. Smith explained the final title to the Boston Herald as the image of a skater in an endless twisted circle, whose aim is to make the thing as beautiful as possible rather than to arrive anywhere. He called the songs more fragmented and dreamlike, and the lyrics mention David Berkowitz, Shiva, the actor Bruno Schleinstein, the Hawthorne Bridge in Portland and the comic book character Sgt. Rock. Rothrock, Schnapf, Jon Brion and Joey Waronker returned from XO. Autumn de Wilde's cover photograph shows him in front of a mural at 4334 Sunset Boulevard in Los Angeles, a wall that fans later turned into a memorial.

Happiness was released as a single on 8 February 2000 and Son of Sam on 11 April, with a video directed by de Wilde. The album debuted at 99 on the Billboard 200 with 19,000 copies sold and stayed on the chart for five weeks. It reached 37 in the UK, and had sold 185,000 copies in the US by 2004. Metacritic gives it 81. Spin called it a progression rather than a disappointment, and NME called it his best effort to date. Pitchfork's Ryan Schreiber put it a step below XO and Either/Or at the time, praising Somebody That I Used to Know and Everything Means Nothing to Me. Pitchfork later placed it 190th among the albums of the 2000s, Rolling Stone placed it 42nd on its list for the decade, and The Guardian placed it 86th on its list of the best albums of the 21st century. It is also included in the book 1001 Albums You Must Hear Before You Die. A digital deluxe edition with seven added tracks, among them his cover of the Schoolhouse Rock! song Figure 8, appeared on 6 August 2019.