Soon after the release of When You Land Here, Mercer and Sandoval formed the Shins as a change of pace, playing as a duo with Cibo Matto and the American Analog Set. With Mercer as the Shins' primary songwriter, the group developed a more focused, crafted sound than Flake Music's charming, if somewhat rambling, collaborative style. Crandall, as well as Scared of Chaka's Dave Hernandez and Ron Skrasek, filled out the Shins' lineup; however, Hernandez and Skrasek left after a short while, due to the success of their main project. By 1999, Flake Music essentially disbanded and Langford also joined the Shins.

With a couple of 7"s on Omnibus -- 1998's "Nature Bears a Vacuum" and 2000's "When I Goose-Step" -- under their belts, the Shins embarked on a tour with Modest Mouse. Sub Pop's Jonathan Poneman caught the San Francisco date of the tour and asked the Shins to contribute a single to the label's Single of the Month Club, which eventually became an offer to release their 2001 single "New Slang" and their debut album, Oh, Inverted World. The group spent the rest of the year touring with acts such as Preston School of Industry and Red House Painters. The release of the singles "Know Yr Onion!" and "The Past and the Pending" kept the Shins' success going into 2002, cementing Oh, Inverted World as one of the definitive indie rock albums of the early 2000s and the band as one of the style's definitive artists.

By the time the band recorded their second album, Chutes Too Narrow, Langford was replaced on bass by Dave Hernandez (ex-Scared of Chaka). The album appeared in fall 2003, their first to reach the Billboard charts. The Shins' profile increased drastically the next year when actor Zach Braff included several of their songs in his 2004 movie Garden State with one of the main characters going so far as to proclaim that "New Slang" would "change your life." Its follow-up, Wincing the Night Away, appeared in January 2007 and sold over a staggering 100,000 copies in its first week. The Shins had never before hit higher than number 86 on the Billboard charts, but the album's sales snagged the guys a debut spot of number two. (This was also a record for Sub Pop itself, as the label had only previously peaked at number 79 with the Afghan Whigs' 1996 album Black Love.) It was also nominated for a Grammy for Best Alternative Album.

In 2008, the band announced that their contract with Sub Pop was up, and that their next album would be released through Mercer's own Aural Apothecary label. The resulting Port of Morrow featured an all new backing band, including fellow songwriters Jessica Dobson and Richard Swift, Modest Mouse drummer Joe Plummer, and Yuuki Matthews from the Crystal Skulls. It arrived in March 2012, received generally positive reviews, and promptly reached number three on the Billboard charts.