The beginning of 1988 was spent writing and rehearsing for their fourth album, State of Euphoria. The first single was "Antisocial," originally by the French band Trust, a favorite of Charlie. A video was made for the song, which reached number five on MTV. The video also included a cameo appearance by the Madman Ozzy Osbourne. The day after the video was made, Anthrax left to tour with him. State of Euphoria went gold within three months of its release. They did their Road to Euphoria Tour with Living Colour. They headlined the Headbanger's Ball tour with Exodus and Helloween. A single was released for "Make Me Laugh," which is about televangelism. Other song topics include "Now It's Dark" inspired by the David Lynch film Blue Velvet and "Misery Loves Company" in response to Stephen King's novel Misery. A video was made for the song "Who Cares Wins." This song came about because of the homeless situation in New York. It didn't receive support from MTV basically because it was too serious for them. Yes, a song encouraging teenagers to help the homeless was too serious for MTV. (More like eMpTyV) An EP entitled Penikufesin was released in 1989. It featured "Now It's Dark" and 5 songs that were originally b-sides on State of Euphoria singles. After the touring was over, they decided to take three months off before beginning work on their fifth album, Persistence of Time. The rest was well needed. "Last July, I virtually locked myself in my room and didn't come out until October," Charlie revealed in a 1990 Island press release. Part of me felt like that guy in the Saigon hotel room in Apocalypse Now while the other part was coming up with some of my strongest stuff ever."

On December 5 and 16, 1989 at L' Amours, two more shows were done under the name Satan's Lounge Band. It helped bring back the old local gig tradition which they couldn't do last year because of touring commitments. "It's a way to get back to our roots...to give back a little something to the community and to all the people who have supported us over the years," says Frankie.