K.D. Lang's 2008 Nonesuch Records release, Watershed served as the first album of newly written material from the Grammy winner since 2000's Invincible Summer and her first studio album since 2004's acclaimed Canadian songbook, Hymns of the 49th Parallel. As the title suggests, Watershed represented a milestone of Lang's groundbreaking career. For the first time she assumed the role of producer – as well as writer, singer, and multi-instrumentalist – for this album of eleven new songs. Lang reunited with longtime collaborators including pianist Teddy Borowiecki, bassist David Piltch, steel player Greg Leisz, and guitarist Ben Mink. Jon Hassell makes a guest appearance on trumpet, as does new Nonesuch labelmate Noam Pikelny, banjo player for the Punch Brothers.

In contrast to Lang's usual organization of albums around a particular sound (such as the clear-eyed country of Absolute Torch and Twang) or concept (as with the elegant smoking songs of Drag), the unifying theme of Watershed is a much more personal look at K.D. Lang and where she found herself at the time. Featuring plenty of musical and lyrical intimations of how she got here, Lang explained that, "Watershed is like a culmination of everything I've done – there's a little bit of jazz, a little country, a little of the Ingénue sound, a little Brazilian touch. It really feels like the way I hear music, this mash-up of genres, and I think it reflects all the styles that have preceded this in my catalogue. I didn't feel the need to be genre-specific because this experience felt so wide open."