Rabid Records was established by Martin Hannett, Tosh Ryan, John Crumpton and Lawrence Beadle in early 1977, using the money Hannett had made from his fly-posting business.

The first band Rabid Records recorded was Slaughter and the Dogs from Wythenshawe, Manchester. Hannett went on to produce the Spiral Scratch EP for another local punk band, Buzzcocks. Other signings included John Cooper Clarke, Ed Banger and the Nosebleeds and the label's biggest seller, Jilted John.