As Nasty As They Wanna Be was released in 1989 and became the group's biggest hit yet; the single "Me So Horny" even climbed into the Top 40 despite virtually nonexistent airplay. Word spread even farther about the group's unadulterated raunchiness, attracting the attention of the ultra-conservative watchdog group the American Family association, who weren't satisfied with the album's parental advisory warning sticker. AFA supporter Jack Thompson, a lawyer and religious activist, convinced Florida governor Bob Martinez to open an inquiry into whether As Nasty As They Wanna Be violated Florida obscenity laws. The state prosecutor determined that action had to be taken on the local, not state, level, and thus in early 1990 Broward County sheriff Nick Navarro obtained a copy of the album and secured a ruling from County Circuit Court Judge Mel Grossman that there was probable cause that the album was legally obscene. Navarro warned record stores around the county that selling the album might subject them to prosecution, and the 2 Live Crew filed suit alleging that Navarro had unconstitutionally overstepped his bounds. In June, District Court Judge Jose Gonzalez ruled that As Nasty As They Wanna Be was legally obscene, and therefore illegal to sell. Record retailer Charles Freeman was arrested two days later for selling the album to an undercover cop, and the three rapping members of the 2 Live Crew were arrested on obscenity charges for performing material from the record in a local club. They were acquitted a few months afterward, thanks in part to expert testimony from Duke professor Henry Louis Gates, and Freeman's conviction was later overturned on appeal.
Meanwhile, As Nasty As They Wanna Be had become the forbidden fruit of choice for teenage boys across the country, selling over two million copies. Several other incidents were reported around the country involving record store owners being arrested for selling the album. The publicity also attracted the attention of George Lucas, who successfully sued Campbell for trademark infringement over his stage and label name, Luke Skyywalker; he subsequently shortened both to Luke. Capitalizing on the media frenzy, Campbell struck a distribution deal with Atlantic and put together a semi-political album called Banned in the U.S.A., after securing rights for the title track from Bruce Springsteen; it was billed to Luke Featuring 2 Live Crew. It sold like hotcakes on first release, and the title single became the group's second Top 40 hit. In 1991, the group released the first full-length live rap album ever, Live in Concert, as well as the official follow-up to As Nasty As They Wanna Be, Sports Weekend. They sold disappointingly, especially considering the group's recent notoriety, and proved to be the last albums they would record together as a quartet. To compound matters, Luke Records was successfully sued for 1.6 million dollars in royalties by MC Shy D.
In 1992, the Court of Appeals in Atlanta overturned Jose Gonzalez' ruling that As Nasty As They Wanna Be was legally obscene. At issue was Gonzalez' refusal to heed expert testimony (he'd pronounced himself fit to judge community standards of decency, since he'd lived in the community for 30 years), as well as the fact that the burden of proof of obscenity should have rested with Sheriff Navarro, who submitted nothing besides a copy of the album as evidence. The appeals court's decision was later upheld by the Supreme Court. Meanwhile, the 2 Live Crew was drifting apart. Luke and Fresh Kid Ice both released solo albums (I Got S**t on My Mind and The Chinaman, respectively), and original Crew members Ice and Mr. Mixx teamed up as the Rock on Crew for Deal With This. Luke continued his solo career over the rest of the '90s.
In 1994, Luke, Fresh Kid Ice, and new rapper Verb (born Larry Dobson) regrouped as the New 2 Live Crew, issuing the album Back at Your Ass for the Nine-4. The same year, the group found themselves back in court yet again, this time over a lawsuit by the publishers of Roy Orbison's "Oh, Pretty Woman." They charged 2 Live Crew with plagiarism for recording a parody of the song on 'As Clean As They Wanna Be', alleging that the reinterpretation tarnished the image of the original. The case went all the way to the Supreme Court, which ruled that parody constituted fair use and found in favor of the group. The New 2 Live Crew didn't last long, as Luke chose to concentrate on his solo career. In 1995, Luke Records filed for bankruptcy, as Campbell was beset by creditors and expenses; both he and the remaining 2 Live Crew wound up on Lil' Joe, a label founded by his ex-business partner Joe Weinberger. In 1996, Fresh Kid Ice, Brother Marquis, and Mr. Mixx re-formed the 2 Live Crew without Campbell and released Shake a Lil' Somethin'. Brother Marquis departed afterwards, and down to the two original California members, the 2 Live Crew issued The Real One in 1998. Luke, meanwhile, continued to record steadily, as well as releasing several compilation albums showcasing new South Florida talent.