Co-writer Leroy Hutson said:

“The Ghetto” came about one Tuesday evening, when Donny came home, and I was sitting at the keyboard playing a riff. He heard me playing, came in, and said to me exactly these words: “No, Hoss” – he called me ‘Hoss’ – “it should go like this.” Then he sat and played the bass line. And as he played that, I played the riff, and an hour and a half later, we had a classic.

I had a reel-to-reel tape recorder in the apartment, and we put the idea down, and once it was down to the point where it had a song structure, we sat on the couch and listened to it. And that day – it was the most uncanny thing – the sun was shining bright, but it was stormy. There was thunder, rain and sunshine all at once, and the two of us knelt in the windows of the apartment and looked out, and it was like the traffic was synchronised to the movement of the song. It was all so magical and a very wonderful occasion.

In the liner notes to his final album, Extension of a Man, Hathaway wrote:

I was earlier inspired by my environment to write “The Ghetto”. I felt it was a song that all Black people could relate to … being happy, lively and reflecting on the joys of a people in a suppressed area.

In a rare interview with Blues & Soul, he also spoke on its background.

“The Ghetto” was written at around the same time [as “Thank You Master (For My Soul”)] — 1967 — but the companies that I took it to turned it down because they thought it might incite a riot! But it was and still is nothing but music.

We went into the studio and Donny said, “Hey man, check this out”: he sat down and started playing “The Ghetto”, and we just jumped in there and played something to go with it. We ran it down a couple or three times, rolled the tape, and it was a done deal.

— Phil Upchurch, guitarist, Never My Love: The Anthology liner notes