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The origins of Alive II go back to early 1977 when the band's manager, Bill Aucoin, had the idea to have Eddie Kramer record a live album during the evening show at Budokan Hall in Tokyo on April 2, 1977. The plan was to release a live album to give KISS some much deserved time off before recording the album that would become Love Gun later that Fall. Kramer finished work on the album, but Casablanca Records and KISS deemed it unusable, and the band forged ahead with the Love Gun sessions.

Most of the live tracks on Alive II were recorded during the band's August 26-28 residency at the Los Angeles Forum while on the Love Gun tour. The 3:00 PM soundchecks at the August 26 & 27 shows were recorded, and later used on the album (i.e. "Tomorrow And Tonight") with crowd noise being dubbed in later. "Beth" and "I Want You" were lifted from the aborted Japanese live album and used on the finished Alive II.

As the band did not want to duplicate songs included on Alive!, the songs chosen for the three live sides of the album were all drawn from Kiss' three preceding studio albums - Destroyer, Rock and Roll Over and Love Gun.

On the original double album, the songs on side 4 (tracks #6-10 on the second CD) are studio tracks. Although Ace Frehley was originally credited for lead guitar on the studio tracks, the remastered version released in 1997 confirmed what had been speculated by Kiss fans for years - Bob Kulick actually played lead guitar on three tracks ("All American Man", "Rockin' In The U.S.A." and "Larger Than Life"), not Frehley. Frehley's sole involvement for the studio songs was to handle all guitars and bass guitar for "Rocket Ride." Paul Stanley played all guitars on "Anyway You Want It" which was originally recorded by the Dave Clark Five in 1965.