At FAME Studios in Muscle Shoals, Duane Allman became the primary session guitarist, recording with artists such as Aretha Franklin and King Curtis. Duane suggested to Wilson Pickett they record a cover of "Hey Jude" by the Beatles; the single went to number 23 on the national charts. FAME signed Duane to a five-year recording contract, and he put together a group, including Johnny Sandlin and Paul Hornsby. Duane recruited Jai Johanny Johanson (Jaimoe) after hearing his drumming on a songwriting demo of Jackie Avery, and the two moved into his home on the Tennessee River. Allman invited bassist Berry Oakley to jam with the new group; the pair had met in a Macon, Georgia club some time earlier, and became quick friends. The group had immediate chemistry, and Duane's vision for a "different" band — one with two lead guitarists and two drummers — began evolving. Meanwhile, Phil Walden, the manager of the late Otis Redding and several other R&B acts, was looking to expand into rock acts. FAME owner Hall became frustrated with the group's recording methods, and offered the tracks recorded and their contract to Walden and Jerry Wexler of Atlantic Records, who purchased them for $10,000. Walden intended the upcoming group to be the centerpiece of his new Atlantic-distributed label, Capricorn.
Duane and Jaimoe moved to Jacksonville in early March 1969, as Duane had become frustrated with being a "robot" of those at FAME. He invited anyone who wanted to join to the jam sessions that birthed the Allman Brothers Band. Dickey Betts, leader of Oakley's previous band, the Second Coming, became the group's second lead guitarist, while Butch Trucks, with whom Duane and Gregg had cut a demo less than a year prior, became the new group's second drummer. The Second Coming's Reese Wynans played keyboards, and Duane, Oakley, and Betts all shared vocal duties. The unnamed group began to perform free shows in Willow Branch Park in Jacksonville, with an ever-changing, rotating cast of musicians. Duane felt strongly his brother should be the vocalist of the new group (which effectively eliminated Wynans' position, as Gregg also played keyboards). Gregg left Los Angeles and entered rehearsal on March 26, 1969, when the group was rehearsing Muddy Waters' "Trouble No More" Although Gregg was initially intimidated by the musicians, Duane pressured his brother into "singing [his] guts out." Four days later, the group made their debut at the Jacksonville Armory. Although many names were kicked around, including Beelzebub, the six-piece eventually decided on the Allman Brothers Band.