This composition of Charles N. Daniels (a.k.a. Neil Moret) and Richard Whiting was introduced by vocalist Gene Austin and released in early 1929 on a Victor recording. Two versions of the song made the charts that year:

• Gene Austin (1929, vocal, #3)
• Ted Lewis and His Orchestra (1929, vocal, #15)

Austin and Cliff “Ukulele Ike” Edwards were two of the most popular pre-Bing Crosby vocalists specializing in what was known as “crooning,” a soft manner of singing perfectly suited to the electrical condenser microphone, a new invention in the mid-1920s. Austin in particular had million-seller hits in 1925 (“Yes Sir, That’s My Baby”), in 1926 (“Five Foot Two, Eyes of Blue”), and a mega-hit from 1927 (“My Blue Heaven”). By recording “She’s Funny That Way” in 1928 the tune was almost assured to be a hit.

Songwriters Whiting and Daniels had rarely worked together, yet their association went back to when they were both employed by Remick publishing company’s Detroit office. A 1925 collaboration of the two, “Moon Deer,” with words by Whiting’s frequent lyricist Raymond Egan, was recorded by a few bands but basically faded.

Although Whiting was content in Detroit, his wife Eleanore knew he needed to be either in New York or Los Angeles where opportunities for his talents were greater. Reluctantly he relocated to New York where a chance meeting brought Daniels and Whiting together. Although rarely a lyricist, Whiting agreed to write lyrics for “She’s Funny That Way,” the only time in his career he wrote words for another songwriter.

In Max Wilk’s book They’re Playing Our Song, Richard Whiting’s daughter, vocalist Margaret Whiting, explained the circumstances surrounding her father’s lyrics for “She’s Funny That Way.” It seems that Remick wanted Whiting to move to Los Angeles to compose songs for Hollywood. Whiting wasn’t sure his wife would agree to move from Detroit to the coast, so he wrote the line “I’m only human, a coward at best, I’m more than certain, she’d follow me West,” as a plea to Eleanore. Margaret stated: “You can see that he didn’t think she was going to leave him, but he loved her so much and he was using that for a reason for writing the song.” The song did the trick and the family moved to California in 1929.

“She’s Funny That Way” was one of a run of hits for Charles Daniels. In 1927 the bands of Earl Burtnett and Art Landry scored highly with “Song of the Wanderer,” and Paul Whiteman’s 1928 recording of “Chloe-Song of the Swamp” also did well. The popular Midwest band, the Coon-Sanders Nighthawks, had triumphs with two of Daniels’ 1928 songs, “Ready for the River” and “Slue-foot.”