The debut sold poorly however, and after they were released from Virgin Records, the band regrouped. They toured with 10,000 Maniacs, Toad The Wet Sprocket, Cracker, and The Spin Doctors, and gained and lost several band members along the way. With the help of their manager Andrew Slater, the band secured a new major label record deal with Interscope Records.
Their 1996 album Bringing Down the Horse, recorded with producer T-Bone Burnett (and including collaborations with Michael Penn, Adam Duritz, Mike Campbell, Don Heffington of Lone Justice, and Sam Phillips), yielded several singles, including "6th Avenue Heartache" and "One Headlight". The album sold over six million copies worldwide, three times as many as his father's album Blood on the Tracks sold in over 20 years. Burnett stated at the time: "As far as Jakob is concerned, I can't imagine having larger footsteps to follow in. But Jakob's character is clearly defined and he handles success with grace, which also says a lot about Bob as a father." Burnett went on to state that the success of Bringing Down the Horse had nothing to do with the family name: "I don't think Jakob sold a single record because he is Bob's son. I think he sold a lot of records because "One Headlight" is a very good song. I wonder how many Wallflowers fans even know who Bob Dylan is." The Wallflowers won two Grammy Awards, for Best Rock Vocal Performance by a Duo or Group and Best Rock Song. "One Headlight" also won the VH-1 Video of the Year for 1997.
As of 2007, The Wallflowers have recorded five albums.
In the fall of 2007 The Wallflowers performed live for the first time in more than two years. They did a brief tour including dates on the East Coast in October and the midwest in November. This tour included Jakob Dylan (lead vocals, rhythm guitar), Stuart Mathis (lead guitar), Greg Richling (Bass), and Fred Eltringham (drums). In September 2007 the band announced on their official website that band member Rami Jaffee had left the group.
Dylan wrote and recorded "Here Comes Now" as the theme song for the U.S. television show Six Degrees, which premiered on September 21, 2006. His song "Stardust Universe" premiered on Jericho on October 25, 2006.
A cover of The Band's "Whispering Pines" appears on the tribute CD Endless Highway — The music of The Band, which was released late January 2007. Dylan also contributed backing vocals to the track, "Black Haired Girl," on Jesse Malin's 2007 album, Glitter in the Gutter.
Dylan collaborated with Dhani Harrison on the John Lennon song, "Gimme Some Truth," for the Lennon's tribute album, "Instant Karma: The Amnesty International Campaign to Save Darfur", which was released on June 12, 2007. As of early 2007, Jakob Dylan had performed with his father only once, at a corporate gig for semiconductor company Applied Materials on November 14, 1997, although they played the same show, they did not play together.
In early September 2007, the New York Times reported Dylan was working on his first solo album in a house in Hollywood Hills owned by famed record producer Rick Rubin. Rubin is also listed as the producer of the album New York Times. On February 20, 2008, Dylan's MySpace page and official website released information about the album. The album is called Seeing Things and was released on June 10, 2008. The mostly acoustic album contains 10 tracks. The names of these songs was also released at the same time and dozens of news sources picked up the story. For example, one news story which included the track listing was published in NME News on February 21, 2008.
In the spring of 2008 a series of tour announcements were made that Dylan would be performing with his touring band The Gold Mountain Rebels at Bonnaroo, at the new Rothbury Music Festival, in Rothbury, Michigan, Summerfest in Milwaukee, the Newport Folk Festival, and the Austin City Limits Festival. A number of tour dates in the south, east, and midwest were also confirmed. He played on the Letterman show in June 2008, Leno in July 2008, The Late Late Show with Craig Ferguson in August 2008, and Conan in September 2008, and taped performances for a number of folk radio programs that aired throughout the summer. Jakob Dylan and the Gold Mountain Rebels did a 10-day tour in Europe opening for Eric Clapton in mid-August, and some shows in August and September opening for Willie Nelson at FarmAid in the U.S.