In 1979, Diana Ross commissioned Chic founders Nile Rodgers and Bernard Edwards to create material for a new album, following the success of her final Ashford & Simpson-composed and produced LP, The Boss after taking her daughters to see the band in concert. Rodgers got the idea for "I'm Coming Out" after noticing three different drag queens dressed as Diana Ross at a New York club called the GG Barnum Room. The lyrics hold an additional meaning to Ross, as she was leaving Motown Records and "coming out" from under the thumb of Berry Gordy.

The song was a hit, peaking at number five on the U.S. Pop Singles chart. It is also notable for being the first song usually performed at Ross' performances and concerts since 1980

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