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The song was conceived and written as a tribute and remembrance to their former band member Syd Barrett; the title of the song itself can also be seen as a reference to Barrett (Shine On You Crazy Diamond). The work was first performed on their 1974 French tour and recorded for their 1975 concept album Wish You Were Here. It was intended to be a side-long composition (like "Atom Heart Mother" and "Echoes") but was ultimately split into two sections and used to bookend the album, with new material composed that was more relevant to the album and to the situation in which the band found themselves.

Part I (Wright, Waters, Gilmour) begins with the fade-in of a dense G-minor synthesizer pad created with an EMS VCS 3, ARP Solina, a Hammond organ and the sounds of a wine glass harmonica (recycled from an earlier project known as "Household Objects"). This is followed by Minimoog passages followed by a lengthy, bluesy guitar solo played by Gilmour on a Fender Stratocaster (neck pickup) using a heavily compressed sound and reverb. The harmony changes from G minor to D minor at 2:29, then to C minor, and back to G minor. This is repeated again, and the part ends with the synth pad fading into the background.

Part II (Waters, Gilmour, Wright) begins with a four-note theme (B♭, F, G, E) (known informally as "Syd's theme") repeated throughout much of the entire section. This theme leads the harmony to C major (in comparison to the use of C minor in Part I). Mason starts his drumming and Waters his bass playing after the fourth playing of the four-note theme, which is the point where the riffs get into a fixed tempo, in 6/4 time. The chord leads back to G minor (as from Part I), followed by E♭ major and D major back to a coda from G minor. This part includes another solo by Gilmour.

Part III (Gilmour, Wright, Waters) begins with a Minimoog solo by Wright. This part includes Gilmour's third guitar solo, in the G natural minor scale, and ends with a fade into Part IV. When performed on the Animals tour, Gilmour added distortion to the guitar for this solo. This solo is often dropped in live performances while the rest of part III is still played—notably on Delicate Sound of Thunder and Pulse.

Part IV (Waters, Gilmour, Wright) Waters sings his lyrics, with Gilmour, Wright and female backing vocalists Venetta Fields and Carlena Williams on harmonies.

Part V (Waters, Gilmour, Wright) Part IV is followed by two guitars repeating an arpeggio variation on the main theme for about a minute with the theme of Part II. A baritone saxophone overlays the sounds, played by Dick Parry. The saxophone changes from a baritone to a tenor saxophone, as a time signature switch from 6/4 to 12/8 creates the appearance that the tempo doubles up, though the arpeggio guitar part in the background remains unchanged. The sax solo is accompanied by an ARP string synthesizer keyboard sound. A machine-like hum fades in with musique concrète and segues into "Welcome to the Machine".

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