Panic! at the Disco formed in the suburban area of Summerlin, Las Vegas, by childhood friends Ryan Ross on guitar and Spencer Smith on drums.  Since the age of thirteen, the two played blink-182 covers in bands of different formations, but finally recruited Brent Wilson on bass and Brendon Urie on vocals and guitar.

       Before acquiring Urie on vocals, the band went by the title "Summer League," possibly a reference to the town in which they lived, Summerlin.  Once Urie was officially with the band, they settled on the name Panic! at the Disco.  The band has stated that the name "Panic! at the Disco" comes from the song "Panic" by The Smiths, which includes the line "burn down the disco", as told on their DVD box set, as well as in several interviews.  Another theory, as well as the most popular, is that it originated from a song written by Name Taken titled "Panic", which includes the line "panic at the disco".

         In order to promote their music, the band contacted Fall Out Boy bassist Pete Wentz, through LiveJournal, and sent him a link to their PureVolume site.  Wentz was so impressed that he took a trip to Las Vegas to meet the band in person.  After seeing them play in their garage, he asked if they would sign with his Fueled by Ramen imprint label Decaydance.

         The band officially announced the departure of their bassist, Brent Wilson, with a message on the band's website on May 17, 2006.  No official reason was given for Wilson's departure, although later Wilson claimed he had been kicked out.  The announcement stated that a long-time friend of the band, Jon Walker, would be filling in for the summer tour as a temporary bassist while a permanent replacement was sought.  On July 3rd of that year, the band's MySpace profile was edited to list Walker as bassist/vocals.  Walker is now a permanent member of Panic! at the Disco.