Gosling and Dalton retired in 2008 and were replaced in the band by former Kinks members Jim Rodford and Ian Gibbons, although Dalton has since come out of retirement to perform with the band. Ray Davies, Pete Quaife, and Bob Henrit have occasionally made guest appearances with the group at Kinks fan club conventions.
Ray Davies released the solo album Storyteller, a companion piece to X-Ray, in 1998. Originally written two years earlier as a cabaret-style show, it celebrated his old band and his estranged brother. Seeing the programming possibilities in his music/dialogue/reminiscence format, the American music television network VH1launched a series of similar projects featuring established rock artists titled VH1 Storytellers. Dave Davies spoke favourably of a Kinks reunion in early 2003, and as the 40th anniversary of the group's breakthrough neared, both of the Davies brothers expressed interest in working together again. However, hopes for a reunion were dashed when in June 2004 Dave suffered a stroke while exiting an elevator, temporarily impairing his ability to speak and play guitar. Following Dave's recovery, the Kinks were inducted into the UK Music Hall of Fame in November 2005, with all four of the original band members in attendance. The award was presented by The Who's guitarist and songwriter Pete Townshend, a longtime Kinks fan and friend of Ray Davies. The induction helped fuel sales for the group; in August 2007, a re-entry of The Ultimate Collection, a compilation of material spanning the band's career, reached number 32 on the UK Top 100 album chart and number one on the UK Indie album chart.
In December 2007, Record Collector published an interview with Ray Davies in which he said, "I spoke to Quaife about a month ago and he dearly wants to make another record with me. I think Dave's getting better and Mick's still playing. It would be great to get back together just to see what musical ideas we had, and what would happen." The Daily Mail subsequently interpreted his comments as a declaration that a reunion of the band's original line-up was imminent. Dave Davies swiftly rejected the idea of a reunion. He told a reporter that "it would be like a bad remake of Night of the Living Dead" and added, "Ray has been doing Karaoke Kinks shows since 1996."