In 1987, friends Billie Joe Armstrong and Mike Dirnt, 15 years old at the time, formed a band called Sweet Children. The first Sweet Children show took place on October 17, 1987, at Rod's Hickory Pit in Vallejo, California where Armstrong's mother was working. In 1988, Armstrong and Dirnt began working with former Isocracy drummer, John Kiffmeyer (also known as Al Sobrante). Kiffmeyer served as both the band's drummer and business manager, handling the booking of shows and helping the band establish a fan base.

Larry Livermore, owner of Lookout! Records, saw the band play an early show and signed them to his label. In 1989 they recorded their first EP, 1,000 Hours. Before 1,000 Hours was released, the band dropped the name Sweet Children, according to Livermore this was done in order to avoid confusion with another local band Sweet Baby. The band adopted the name Green Day, allegedly due to their fondness of marijuana.

Lookout! would release Green Day's first LP, 39/Smooth in early 1990. Green Day would record two EPs later that year: Slappy and Sweet Children, the latter of which included some older songs they had recorded for Minneapolis indie label Skene! Records. In 1991, Lookout! Records released 1,039/Smoothed Out Slappy Hours, a compilation of the 39/Smooth, Slappy, and 1,000 Hours EPs. In late 1990, shortly after the band's first nationwide tour, Sobrante left the East Bay area to attend college. The Lookouts drummer Tré Cool began filling in as a temporary replacement, and when it became clear that Sobrante did not plan on committing to the band full time, Tré Cool's position as Green Day's drummer became permanent. The band went on tour for most of 1992 and 1993, and played a stretch of shows overseas in Europe. The band's second full length album Kerplunk sold about 50,000 copies in the U.S., which was considered quite a large amount for the independent punk scene in 1992.

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