The song was created on the first day of Dreamville's sessions for the compilation album.Bas wrote on Instagram about his initial reaction to the song when he arrived in Atlanta:
"I had just landed from South Africa and went straight to the studio. Soon as I walked into the A-room, JID was starting this song, first verse and hook, and I was like '[save me a verse please]. That was literally the first verse I recorded when I got to Atlanta after a 17 hour flight, J. Cole was tucked off with T-Minus finishing "Middle Child" and popped his head in [the room] like 'yes, I need parts.' My brother Johnny Venus, who has my vote for camp MVP, well I don't want to give it away but he came in and managed to make the song his. A big assist from our host city's own Young Nudy."
In February, Dreamville gave a live preview of the song after the All Star game – which J. Cole was the halftime show performer, during the free concert in Charlotte. In May, JID also gave fans a snippet of the single during his set at Miami's Rolling Loud Festival.
Under the EP 1-888-88-DREAM, the single was released with "Got Me" on June 12. The EP's title is referencing the "1-888-88-DREAM" phone number that Cole used to announce the original Revenge of the Dreamers in 2014. Dreamville representatives used hotline phone number to talk to fans and also play some exclusive tracks from the label's compilation album.
Complex named "Down Bad" as one of the best songs of the week, calling it a "rowdy, kick-in-the-door anthem ready-made for summer mischief" and said the artists pack a ridiculous amount of energy into less than three minutes, beginning with a "tragically short verse" from Young Nudy and closing things with a "rapid-fire verse" from EarthGang's Johnny Venus.