A solo career seemed imminent, but the singer struggled; dogged by a reputation as a stubborn, difficult perfectionist unmoved by prevailing commercial attitudes, Collins found no one willing to offer him a contract, and only after a pair of sold-out London performances did Creation's Alan McGee sign him to the label's Elevation subsidiary in 1986. The singles "Don't Shilly Shally" (produced by Cocteau Twin Robin Guthrie) and "My Beloved Girl" followed, but both failed to chart; in 1987, Elevation folded, and after Collins and McGee had a falling out, the singer was again left without a contract.

Some months later, Collins accepted the opportunity to record at a small German studio run by a group of devoted Orange Juice fans; cut with the aid of producer Dennis Bovell as well as Aztec Camera frontman Roddy Frame, the resulting LP, Hope and Despair, a brooding, ambitious collection spotlighting Collins' smooth, soulful baritone, was eventually picked up by the Demon label and issued in 1989. The album proved quite successful on the independent charts, and soon Collins returned to the studio to record 1990's spartan Hellbent on Compromise; when the LP failed to repeat its predecessor's good fortune, Demon dropped him from their ranks, and another long sabbatical followed.

After spending much of the decade's first half in the producer's seat, overseeing sessions from artists including longtime pal Paul Quinn, the Rockingbirds, A House, and the Frank and Walters, Collins finally earned another shot as a performer: after signing with the tiny U.K. indie Setanta, he recorded 1994's Gorgeous George, a scathing, shimmering set of retro-pop highlighted by the single "A Girl Like You." Slowly, the song became a massive hit throughout Europe as well as the U.S. and returned Collins to the charts for the first time since the 1983 Orange Juice smash "Rip It Up," finally establishing the longstanding cult hero as something of a household name. In 2005, Collins was rushed to the hospital after suffering a severe cerebral hemorrhage; he would eventually spend six months recovering from brain surgery. The album that Collins had been recording prior to his illness was mixed after he was discharged from the hospital. Entitled Home Again, it was released on Heavenly Recordings in September 2007. In 2010 Collins released Losing Sleep, his first new collection of songs since his illness.