After their success with Life, The Cardigans signed to Mercury Records, under which they released First Band on the Moon worldwide in 1996. "Lovefool" was a hit worldwide, particularly in the US and Japan, where the album reached platinum status in three weeks. The album also achieved gold sales status in the US. "Lovefool" was shown on MTV in the late 1990s as a music video with clips from the 1996 hit film Romeo + Juliet starring Leonardo DiCaprio and Claire Danes. It also featured in the film Cruel Intentions (1999).
In 1997, the band played themselves on the graduation episode of Beverly Hills, 90210.
1998's Gran Turismo was followed by a long hiatus during which the band members pursued solo side projects. The same year they also released a compilation album of rare B-sides, The Other Side of the Moon as a Japan-only release. The video of the song "My Favourite Game" was censored by MTV for showing reckless driving. Despite this, it went on to become their second global hit song. "My Favourite Game" was featured on the soundtrack of the PlayStation video game Gran Turismo 2 for the opening sequence of races. That year also saw their song "Deuce" appearing on The X-Files: The Album.
In 1999 the Cardigans recorded a duet cover of Talking Heads' "Burning Down the House" with Tom Jones for his album Reload