In the second half of 1967 and through to early 1968, when still part of Pink Floyd, Barrett's behaviour became increasingly erratic and unpredictable. Many report having seen him on stage with the group during this period, strumming on one chord through an entire concert or not playing at all. In August 1967, Pink Floyd were forced to cancel their appearance at the prestigious National Jazz and Blues Festival, informing the music press that Barrett was suffering from nervous exhaustion. Band manager Peter Jenner and bassist Roger Waters arranged for Barrett to see a psychiatrist (an appointment he failed to attend), while a stay on the Spanish island of Formentera with Sam Hutt, a doctor well established in the underground music scene, led to no visible improvement in Barrett's behaviour. A few dates in September were followed by the band's first tour of the United States.[6] At this point, Barrett's condition grew steadily worse. At a show at The Fillmore in San Francisco, during a performance of "Interstellar Overdrive", Barrett slowly detuned his guitar; the audience seemed to enjoy such antics, unaware of the rest of the band's consternation. Sometime in October, Jenner transferred tapes of "In the Beechwoods", two takes of "Vegetable Man", and a 5-minute backing track called "No Title", which Jenner hoped Barrett would finish eventually.
Around Christmas 1967, guitarist David Gilmour, an old friend of Barrett's from Cambridge, was asked by the other members of Pink Floyd to join as a second guitarist,[9] initially not to replace Barrett, but cover for him, because his unpredictable behaviour prevented him from performing. For several shows Gilmour sang and played guitar while Barrett wandered around on stage, every now and then deciding to join in playing guitar and singing. Waters and fellow band members keyboardist Richard Wright and drummer Nick Mason soon grew weary of Barrett's on-stage antics and, on 26 January 1968, when Waters was driving his bandmates from London to a show at Southampton University, they all agreed to go without Barrett: according to Gilmour's recollection, one person asked, "Shall we pick Syd up?" and another said, "Let's not bother." Since Barrett had written or co-written 10 of the 11 songs on their debut album, The Piper at the Gates of Dawn, as well as the band's three singles up to this point, the original plan was to keep him in the group as a non-touring member − in a similar arrangement to what The Beach Boys had done with Brian Wilson − but this soon proved to be unworkable. At his last rehearsal with the band, he presented a new song entitled "Have You Got It Yet?", which proved to be deliberately unplayable as the others attempted to join in, until they realised the joke of the title. On 6 April, the group officially announced that Barrett was no longer a member of Pink Floyd. Upon leaving the band, Barrett said to Melody Maker: "I suppose it was really just a matter of being a little offhand about things".

Barrett was the second and final studio album of new material released by former Pink Floyd member Syd Barrett. In February 1970, shortly after releasing his first album, The Madcap Laughs, Barrett appeared on John Peel's Top Gear radio show where he presented only one song from the newly released album. Two days later, he began working on his second album in the Abbey Road Studios, this time with Pink Floyd members David Gilmour and Richard Wright as producers and musicians.