Virgin Records releases the second album by former Split Enz lead singer Tim Finn, Big Canoe. With contributions from fellow ex-Enz bandmate Phil Judd, the album is elaborately produced, but fails to make a splash (at roughly the same time that Finn’s younger brother, Neil, is climbing the charts with Crowded House). 
IRS Records releases R.E.M.‘s fourth album, Lifes Rich Pageant, featuring the single “Fall On Me”.
Virgin Records releases the XTC album Skylarking.
Zang Tuum Tumb releases the Art Of Noise compilation Daft, gathering much of the band’s first album and B-side and EP material in one release.
The Alan Parsons Project releases its tenth album, Gaudi, including the single “Standing On Higher Ground”.
RCA Records releases a significantly reworked edition of Australian group Pseudo Echo‘s album Love An Adventure in North America, adding the single “Funkytown” (a cover of the Lipps Inc. song).
British label Legacy Records releases Starting Up, the fourth and final solo album of new material by Roy Wood (ELO, Wizzard).
A&M Records releases the Supertramp compilation album Classics, Volume 9 – Supertramp as part of the label’s 25th anniversary Classics series.
EMI Records releases the Pseudo Echo album Long Plays ’83-’87, gathering extended mixes of the storied Australian group’s various singles.
Warner Bros. Records releases the album Tango In The Night by Fleetwood Mac, featuring the singles “Big Love”, “Little Lies”, and “Seven Wonders”. This is the final studio album by the lineup that recorded Rumours and Tusk; Lindsey Buckingham goes his own way following this album.
Virgin Records releases the Roy Orbison album In Dreams: The Greatest Hits, which consists entirely of new recordings of Orbison’s most popular songs (since the original masters are in legal limbo due to the bankruptcy of Monument Records, Orbison’s former label); the compilation is timed to land near the release of the David Lynch film Blue Velvet, which used “In Dreams” in a pivotal scene.
RCA Records releases The Best of A Flock Of Seagulls, a retrospective of the new wave group’s heyday.
Island Records issues Yoyo, the second album by rock group Bourgeois Tagg, fronted jointly by Brent Bourgeois and Larry Tagg. This album is produced by Todd Rundgren, who also recruits most of the band members to play on his next album. The biggest hit turns out to be the ballad “I Don’t Mind At All”, written by Bourgeois and guitarist Lyle Workman; the band breaks up at a later date.
IRS Records releases R.E.M.‘s fifth album, Document, featuring the singles “The One That I Love” and “Its the End of the World As We Know It (and I Feel Fine)”. This is the band’s last IRS release before signing with Warner Bros.
Art Of Noise releases its third album, In No Sense? Nonsense!. Now consisting only of Anne Dudley and J.J. Jeczalik, the group’s popular direction continues, with a cover of the Dragnet theme song (used heavily to promote a big-screen remake/spoof of the cop show starring Dan Aykroyd and Tom Hanks) and an instrumental from the Fat Boys’ movie Disorderlies, “Roller 1”.
Capitol Records releases the Paul McCartney compilation album All The Best!, gathering highlights of McCartney’s solo career and his work with Wings.
Dark Horse Records releases ex-Beatle George Harrison‘s 11th solo album, Cloud Nine, featuring contributions from Ringo Starr, Elton John, and Jeff Lynne, among others. The first single, “Got My Mind Set On You”, is a major hit, putting Harrison (and Lynne as a producer) back on the map.
The Alan Parsons Project releases a remastered and revised edition of its first album, Tales of Mystery & Imagination, based on the works of Edgar Allan Poe. For the first time, narration recorded in 1976 by Orson Welles is heard in the context of the album itself. This is the first time the album has been available on CD.
The German arm of CBS Records releases the album Fantasie by Münchener Freiheit. The same album, except with English lyrics, will be issued in North America and the UK later in the year.
Scotti Bros. releases “Weird Al” Yankovic‘s fifth album, Even Worse, featuring the single “Fat” (inspired by Michael Jackson’s single “Bad”).
Threshold Records releases the The Moody Blues’ album Sur La Mer, featuring the single “I Know You’re Out There Somewhere”.
Under much scrutiny due to the success of the group’s debut album, Crowded House releases its second album, Temple Of Low Men. This album includes the singles “Better Be Home Soon” and “Into Temptation”.
Atlantic Records releases the debut (and only) self-titled album from Y Kant Tori Read, a band centered around future solo artist Tori Amos.
The Schnell Fenster album The Sound Of Trees is released in America by Atlantic Records (having already been issued by EMI in Australia and New Zealand). The band is formed around former members of Split Enz, including founding guitarist Phil Judd, percussionist Noel Crombie, ’80s bassist Nigel Griggs, and guitarist Michael den Elzen (the only member of the group not to have played for Split Enz, though he has been a session player on a Tim Finn solo album). The single “Whisper” fails to take off in the States and the band breaks up after running up significant debts trying to promote the album.
Restless Records releases They Might Be Giants‘ second album, Lincoln, featuring the singles “Ana Ng” and “They’ll Need A Crane”.
CBS Records releases the album Fantasy by German band Münchener Freiheit (shortened to “Freiheit” for the English-speaking world). Issued in a German language edition earlier in the year, this version of the album features English lyrics and a different arrangement of the band’s best-known single, “Keeping The Dream Alive”.
Warner Bros. Records releases the Traveling Wilburys’ debut album Volume One, featuring the singles “Handle With Care” and “End Of The Line”.
Warner Bros. releases R.E.M.‘s sixth album, Green, featuring the singles “Stand”, “Orange Crush”, and “Pop Song 89”.
Narada Equinox releases Ralf Illenberger‘s instrumental jazz album Circle in the U.S. (the album was released earlier in the year in Germany).
I.R.S. Records releases the Fine Young Cannibals’ second album, The Raw & The Cooked, featuring the single “She Drives Me Crazy”.