Lady Gaga had initially signed with Def Jam Recordings at the age of 19 after Island Def Jam Music Group Chairman and CEO L. A. Reid heard her singing down the hallway from his office. After three months, she was dropped from Def Jam,[12] although at the same time, her former management company introduced her to songwriter and producer RedOne, whom they also managed.[13] The first song she produced together with RedOne was "Boys Boys Boys",[13] a mash-up inspired by Mötley Crüe's "Girls, Girls, Girls" and AC/DC's "T.N.T."[14] She moved out of her parents' house and started performing downtown in the Lower East Side club scene, with bands Mackin Pulsifer and SGBand.[15] Soon after she began taking drugs and performing at burlesque shows.[7] She said her father "just didn't understand it", and that he could not look at her for several months.[7][14] Music producer Rob Fusari, who helped her write some of her earlier songs, compared her vocal style to that of Freddie Mercury. Fusari helped create the moniker Gaga, after the Queen song "Radio Ga Ga". Germanotta was in the process of trying to come up with a stage name, when she received a text message from Fusari that read "Lady Gaga".[16]
Every day, when Stef came to the studio, instead of saying hello, I would start singing 'Radio Ga Ga'. That was her entrance song. [Lady Gaga] was actually a glitch; I typed 'Radio Ga Ga' in a text and it did an autocorrect so somehow 'Radio' got changed to 'Lady'. She texted me back, 'That's it.' After that day, she was Lady Gaga. She’s like, 'Don’t ever call me Stefani again.'

She was known thereafter as Lady Gaga.[14]
 
Gaga performing at a bar in October, 2008.

Throughout 2007, she collaborated with performance artist Lady Starlight, who helped her create her onstage fashions.[17] The pair began playing gigs at downtown club venues like the Mercury Lounge, The Bitter End, and the Rockwood Music Hall,[18] with their live performance art piece known as "Lady Gaga and the Starlight Revue".[19] Billed as "The Ultimate Pop Burlesque Rockshow",[20] their act was a low-fi tribute to 1970s variety acts.[21] In August 2007, she and Lady Starlight were invited to play at the American music festival Lollapalooza.[22] The show was critically acclaimed, and their performance received highly positive reviews.[5][18] Having initially focused on avant-garde, and electronic dance music, Lady Gaga found her musical niche when she began to incorporate pop melodies and the vintage glam rock of David Bowie and Queen into the mix.[23] During this time she was featured on a couple of songs in a two-CD audio book that was done to go along with the children's book The Portal in the Park by Cricket Casey. She performed with Melle Mel on the songs "World Family Tree" and "The Fountain of Truth".[24]

Rob Fusari sent songs he produced with her to his friend, producer and record executive Vincent Herbert.[25] Herbert was quick to sign her to his label Streamline Records, an imprint of Interscope Records, upon its establishment in 2007.[26] She has credited Herbert as the man who discovered her, while adding that "I really feel like we made pop history, and we're gonna keep going".[25] Having already served as an apprentice songwriter under an internship at Famous Music Publishing, which was later acquired by Sony/ATV Music Publishing, she subsequently struck a music publishing deal with Sony/ATV.[27] As a result, she was hired to write songs for Britney Spears, as well as being commissioned by Interscope to write for labelmates New Kids on the Block, Fergie and the Pussycat Dolls.[27] While she was writing at Interscope, singer-songwriter Akon recognized her vocal abilities during her singing of a reference vocal for one of his tracks in studio.[28] He then convinced Interscope-Geffen-A&M Chairman and CEO Jimmy Iovine to form a joint deal by having her also sign with his own label, Kon Live Distribution,[12] and would later call her his "franchise player."[29] She pursued her collaboration with RedOne by working with him in the studio for a week on her debut album,[27] spawning the debut international hit singles "Just Dance" and "Poker Face". She also joined the roster of Cherrytree Records, an Interscope imprint established by producer and songwriter Martin Kierszenbaum, after co-writing four songs with Kierszenbaum including the single "Eh, Eh (Nothing Else I Can Say)".[27]