Disenchanted with Sub Pop and with the Smart Studios sessions generating interest, Nirvana decided to look for a deal with a major record label since no indie label could buy the group out of its contract. Following repeated recommendations by Sonic Youth's Kim Gordon, Nirvana signed to DGC Records in 1990. The band subsequently began recording its first major label album, Nevermind. The group was offered a number of producers to choose from, but ultimately held out for Butch Vig. Rather than recording at Vig's Madison studio as they had in 1990, production shifted to Sound City Studios in Van Nuys, Los Angeles, California. For two months, the band worked through a variety of songs in its catalog. Some of the songs, such as "In Bloom" and "Breed", had been in Nirvana's repertoire for years, while others, including "On a Plain" and "Stay Away," lacked finished lyrics until mid-way through the recording process. After the recording sessions were completed, Vig and the band set out to mix the album. However, the recording sessions had run behind schedule and the resulting mixes were deemed unsatisfactory. Slayer mixer Andy Wallace was brought in to create the final mix. After the album's release, members of Nirvana expressed dissatisfaction with the polished sound the mixer had given Nevermind.
Initially, DGC Records was hoping to sell 250,000 copies of Nevermind, which was the same level they had achieved with Sonic Youth's Goo. However, the album's first single "Smells Like Teen Spirit" quickly gained momentum, thanks in part to significant airplay of the song's music video on MTV. As it toured Europe during late 1991, the band found that its shows were dangerously oversold, that television crews were becoming a constant presence onstage, and that "Smells Like Teen Spirit" was almost omnipresent on radio and music television. By Christmas 1991, Nevermind was selling 400,000 copies a week in the US. In January 1992, the album displaced Michael Jackson's Dangerous at number one on the Billboard album charts, and also topped the charts in numerous other countries. The month Nevermind reached number one, Billboard proclaimed, "Nirvana is that rare band that has everything: critical acclaim, industry respect, pop radio appeal, and a rock-solid college/alternative base." The album would eventually sell over 8.5 million copies in the United States.
Citing exhaustion, Nirvana decided not to undertake another American tour in support of Nevermind, instead opting to make only a handful of performances later that year. In March 1992, Cobain sought to reorganize the group's songwriting royalties (which to this point had been split equally) so that they were more representative of the fact that he wrote the majority of the music. Grohl and Novoselic did not object to Cobain's request, but when the frontman asked for the agreement to be retroactive to the release of Nevermind, the disagreements between the two sides claim close to breaking up the band. After a week of tension, Cobain ended up receiving a retroactive share of 75 percent of the royalties, and bad feelings about the situation remained within the group afterward. Amid rumors that the band was disbanding due to Cobain's health, Nirvana headlined the closing night of England's 1992 Reading Festival, where Cobain personally programmed the performance lineup. Nirvana's performance at Reading is often regarded by the press as one of the most memorable of the group's career. A few days later, Nirvana performed at the MTV Video Music Awards where, despite the network's refusal to let the band play the new song "Rape Me" during the broadcast, Cobain strummed and sang the first few bars of the song before breaking into "Lithium". At the ceremony, the band received awards for the Best Alternative Video and Best New Artist categories.
DGC had hoped to have a new Nirvana album by the band ready for a late 1992 holiday season release; since work on it proceeded slowly, the label released the compilation album Incesticide in December 1992. A joint venture between DGC and Sub Pop, Incesticide collected various rare Nirvana recordings and was intended to provide the material for a better price and at better quality than was available via bootleg copies. As Nevermind had been out for 15 months and had yielded a fourth single, "In Bloom", by that point, Geffen/DGC opted not to heavily promote Incesticide, which was certified gold by the Recording Industry Association of America the following February.
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