The Who and the Grateful Dead first shared a bill at the 1967 Monterey Pop Festival, and later crossed paths at Woodstock, A Day on the Green and other massive concerts. It wasn't until March 28th, 1981 – when both groups wrapped up their European tours on the German TV show Rockpalast – that a jam session finally broke out. Midway through the Dead's second set, they brought out Pete Townshend for "Not Fade Away," "Wharf Rat" and Chuck Berry's "Around and Around." As you can see from this video, it was fantastically unrehearsed.
This was a pretty rough time for the Who. Townshend's cocaine habit was spiraling out of control, and the group was still reeling from the loss of drummer Keith Moon and a stampede before their 1979 Cincinnati that left 11 fans dead. Their new album, Face Dances, had some very strong moments, like "You Better You Bet" and "Another Tricky Day," but other songs (most notably "Did You Steal My Money") came off supremely coked-out and paranoid. Sadly, the group's slow and steady decline was just beginning.
The Grateful Dead were in a much better place. Keyboardist Brent Mydland had recently joined the group, and his presence reinvigorated their live show. Jerry Garcia's health problems were a few years away and they were still cruising, even though many fans feel they peaked sometime around 1977.
The 1981 Rockpalast broadcast marked the only time that Townshend played with the Dead, though the band did add "Baba O'Riley" to their set list 10 years later.