Rubber Soul had marked a major step forward; Revolver, released in August 1966 a week before the Beatles' final tour, marked another. Pitchfork's Scott Plagenhoef identifies it as "the sound of a band growing into supreme confidence" and "redefining what was expected from popular music." Revolver featured sophisticated songwriting, studio experimentation, and a greatly expanded repertoire of musical styles ranging from innovative classical string arrangements to psychedelic rock. Abandoning the customary group photograph, its cover—designed by Klaus Voormann, a friend of the band since their Hamburg days—"was a stark, arty, black-and-white collage that caricatured the Beatles in a pen-and-ink style beholden to Aubrey Beardsley", in Gould's description. The album was preceded by the single "Paperback Writer", backed by "Rain". Short promotional films were made for both songs, described by cultural historian Saul Austerlitz as "among the first true music videos", they aired on The Ed Sullivan Show and Top of the Pops in June 1966.
Among Revolver's experimental songs was "Tomorrow Never Knows", for whose lyrics Lennon drew from Timothy Leary's The Psychedelic Experience: A Manual Based on the Tibetan Book of the Dead. Its creation involved eight tape decks distributed about the EMI building, each manned by an engineer or band member, who randomly varied the movement of a tape loop while Martin created a composite recording by sampling the incoming data. McCartney's "Eleanor Rigby" made prominent use of a string octet; Gould describes it as "a true hybrid, conforming to no recognizable style or genre of song." Harrison was developing as a songwriter, and three of his compositions earned a place on the record. In 2003, Rolling Stone ranked Revolver as the third greatest album of all time. During the US tour that followed its release, however, the band performed none of its songs. As Chris Ingham explains, they were very much "studio creations ... and there was no way a four-piece rock 'n' roll group could do them justice, particularly through the desensitising wall of the fans' screams. 'Live Beatles' and 'Studio Beatles' had become entirely different beasts." The final show, at San Francisco's Candlestick Park on 29 August, was their last commercial concert. It marked the end of a four-year period dominated by touring that included over 1,400 concert appearances internationally.
Freed from the burden of touring, the Beatles embraced an increasingly experimental approach as they recorded Sgt. Pepper's Lonely Hearts Club Band, beginning in late November 1966. According to engineer Geoff Emerick, the album's recording took over seven hundred hours. He recalled the band's insistence "that everything on Sgt. Pepper had to be different. We had microphones right down in the bells of brass instruments and headphones turned into microphones attached to violins. We used giant primitive oscillators to vary the speed of instruments and vocals and we had tapes chopped to pieces and stuck together upside down and the wrong way around." Parts of "A Day in the Life" featured a forty-piece orchestra. The sessions initially yielded the non-album double A-side single "Strawberry Fields Forever"/"Penny Lane" in February 1967; the Sgt. Pepper LP followed in June.
The musical complexity of the records, created using relatively primitive four-track recording technology, astounded contemporary artists. For Beach Boys leader Brian Wilson, in the midst of a personal crisis and struggling to complete the ambitious Smile, hearing "Strawberry Fields" was a crushing blow and he soon abandoned all attempts to compete with his friendly rivals. Among music critics, acclaim for the album was virtually universal. Gould:
The overwhelming consensus is that the Beatles had created a popular masterpiece: a rich, sustained, and overflowing work of collaborative genius whose bold ambition and startling originality dramatically enlarged the possibilities and raised the expectations of what the experience of listening to popular music on record could be. On the basis of this perception, Sgt. Pepper became the catalyst for an explosion of mass enthusiasm for album-formatted rock that would revolutionize both the aesthetics and the economics of the record business in ways that far outstripped the earlier pop explosions triggered by the Elvis phenomenon of 1956 and the Beatlemania phenomenon of 1963.
Sgt. Pepper was the first major pop/rock LP to include its complete lyrics, which appeared on the back cover. Those lyrics were the subject of critical analysis; for instance, in late 1967 the album was the subject of a scholarly inquiry by American literary critic and professor of English Richard Poirier, who observed that his students were "listening to the group's music with a degree of engagement that he, as a teacher of literature, could only envy." Poirier identified what he termed its "mixed allusiveness": "It's unwise ever to assume that they're doing only one thing or expressing themselves in only one style ... one kind of feeling about a subject isn't enough ... any single induced feeling must often exist within the context of seemingly contradictory alternatives." McCartney said at the time, "We write songs. We know what we mean by them. But in a week someone else says something about it, and you can't deny it. ... You put your own meaning at your own level to our songs". In 2003, Rolling Stone ranked it number one on its list of the "500 Greatest Albums of All Time".
Sgt. Pepper's elaborate cover also attracted great interest and study: a collage designed by pop artists Peter Blake and Jann Haworth, it depicted the group as the fictional band referred to in the album's title track standing in front of a crowd of famous people. The heavy moustaches worn by the group reflected the growing influence of hippie style, while cultural historian Jonathan Harris describes their "brightly coloured parodies of military uniforms" as a knowingly "anti-authoritarian and anti-establishment" display.
On 25 June, the Beatles performed their forthcoming single, "All You Need Is Love", to an estimated 350 million viewers on Our World, the first live global television link. Released a week later during the Summer of Love, the song was adopted as a flower power anthem. Two months later the group suffered a loss that threw their career into turmoil. Having been introduced to Maharishi Mahesh Yogi only the previous night in London, on 25 August they travelled to Bangor for his Transcendental Meditation retreat. Two days later, their manager's assistant Peter Brown phoned to inform them that Epstein had died.
The coroner ruled the death an accidental carbitol overdose, though it was widely rumoured a suicide. Epstein had been in a fragile emotional state, stressed by personal issues and concern that the band might not renew his management contract, due to expire in October, over discontent with his supervision of business matters, particularly regarding Seltaeb, the company that handled their US merchandising rights. His death left the group disorientated and fearful about the future. Lennon recalled, "We collapsed. I knew that we were in trouble then. I didn't really have any misconceptions about our ability to do anything other than play music, and I was scared. I thought, We've had it now."