In 1983, seeking a return to "sweetness and melody", she co-founded with Berklee classmate and boyfriend Michael Hausman the new wave band 'Til Tuesday, which achieved success in 1985 with its first album, Voices Carry. The title song is said to be inspired by Hausman and Mann's breakup; the video became an MTV staple, winning the MTV Video Music Award for Best New Artist, although Mann's then-signature spiky hair would lead some to dismiss the group. Mann performed with the rock band Rush on the song "Time Stand Still" (from Hold Your Fire, 1987), singing backup vocals and appearing in the music video. With Mann playing an increasingly important role in songwriting, 'Til Tuesday released two more albums, Welcome Home and Everything's Different Now. On the final album and tour, musician Jon Brion joined the band, which broke up in 1990 when Mann left to start her solo career.
Around the time of the first album's release, Mann began a romantic relationship with Jules Shear; they broke up before the final 'Til Tuesday album, which contained the song "J For Jules." Professional relationships from the band would continue: Hausman later became Mann's manager, and Brion produced her first two solo albums, along with the Magnolia soundtrack.
Mann recorded Bachelor No. 2, but Geffen saw no hit singles in the material and ordered her back to the studio. The album languished while Mann and the label fought.
Meanwhile, film director Paul Thomas Anderson, for whom husband Michael Penn and Brion had composed a soundtrack, became a close friend. Mann gained greater public recognition in 1999 — indeed, more than anything else since "Voices Carry" — when she contributed eight songs to the soundtrack of Anderson's Magnolia, including the Academy Award and Grammy-nominated song, "Save Me." Anderson deliberately worked from Mann's lyrics to create the film's characters and situations. Mann soon became sought after as a soundtrack contributor.
In 2006, Mann received her one Grammy Award to date for "Best Recording Package" for her album "The Forgotten Arm".
Mann, Penn, Brion, Fiona Apple, and other musicians had by this time developed a subculture around the Largo nightclub in L.A. Penn and Mann formed a concept called Acoustic Vaudeville to recreate it on tour in California and eventually on an irregular, ongoing national tour. The Acoustic Vaudeville shows intermix music and stand-up comedy; among the comedians joining them for individual shows were Janeane Garofalo, Patton Oswalt, and David Cross.
Mann also released an EP for Christmas in 2005 as a cover single of "Have Yourself a Merry Little Christmas" for sale through her website and iTunes. It also included "Christmastime", the 1996 duet she recorded with Penn for the Hard Eight soundtrack, and a cover of "The Christmas Song". The iTunes version replaced "Christmastime" with a cover of Joni Mitchell's "River" and "I Was Thinking I Could Clean Up for Christmas" from The Forgotten Arm.
Mann's independence from the industry led to more overt political stances. She joined Artists Against Piracy, a group formed to act against the illegal downloading and file sharing of copyrighted music from the Internet. Mann, Penn and Hausman took their experience with SuperEgo to found the independent music collective United Musicians, which is based on the principle that every artist should be able to retain copyright ownership of the work he or she has created, in contrast to normal music industry contracts.
In July 2006, Mann announced that she would be releasing One More Drifter in the Snow, a full-length Christmas album. The album featured primarily covers of Christmas standards, as well as a new version of Christmastime and an original song, called "Calling On Mary", written by Mann and bassist Paul Bryan, who produced the record. It was released on October 31 in the US, and late November 2006 in the UK.
July 2007 also saw the premiere of the music video for a song entitled "31 Today" (which featured comedienne Morgan Murphy alongside Mann and Bobcat Goldthwait as director) was posted on YouTube. The song appears on Mann's seventh studio album, @#%&*! Smilers, released on June 3, 2008.The album debuted on the Billboard 200 at Number 32 (one of Mann's highest positions to date), and on the Top Independent Albums chart at Number 2. @#%&*! Smilers was met with mostly praise, with Billboard stating that it "pops with color, something that gives it an immediacy that's rare for an artist known for songs that subtly worm their way into the subconscious... Smilers grabs a listener, never making him or her work at learning the record, as there are both big pop hooks and a rich sonic sheen."