Guitarist Dimebag Darrell and drummer Vinnie Paul Abbott were not pleased with the difficulties heavy metal band Pantera was experiencing. Abbott described the performance of Pantera's vocalist, Phil Anselmo, as either "hit and miss, depending on what type of chemicals he was on." Anselmo and bassist Rex Brown preferred contributing to their side projects and did not discuss or record Pantera material, while Darrell and Vinnie wanted to continue to write and play music. They thought it was time to move on and began writing new material.
A demo of the song "Crawl" was sent to former Halford guitarist Pat Lachman who auditioned as vocalist. Lachman was hired, and Damageplan was formed in early 2003 with ex-Jerry Cantrell guitarist Shawn Matthews on bass initially, who was replaced after the album recording with the brothers' tattoo artist, Bob Zilla. When writing music, Vinnie claimed; "we put no boundaries on it...we wanted it to be very diverse", and Darrell said "We wanted to stretch out and expand our capabilities to their fullest." The band changed its name to Damageplan and decided to name the first album New Found Power.
The single "Save Me" debuted on American radio on January 26, 2004 and the band's debut album, New Found Power, was released in the United States on February 10, 2004. The album was recorded at the brothers' backyard studio, Chasin' Jason in Arlington, Texas, where previous Pantera albums were recorded. Abbott found that during recording everyone was willing to contribute and "put 100% effort into it", while with Pantera he found it difficult to get Anselmo in the recording studio. Corey Taylor of Slipknot, Zakk Wylde of Black Label Society and Jerry Cantrell of Alice In Chains made guest appearances on the tracks "Fuck You", "Soul Bleed", and the bonus track "Ashes To Ashes" respectively, and Sterling Winfield handled co-production duties.
New Found Power sold 44,676 copies in its first week to debut at number 38 on the Billboard 200. The album received mixed reviews from music critics; Christine Klunk of PopMatters commented "I'm not in the least bit interested in where this band goes or what new and exciting ways they'll think of to abuse the listeners," while Johnny Loftus of Allmusic felt it was a "blazing new beginning".
Alice in Chains' vocalist/guitarist Jerry Cantrell attended a Thanksgiving party hosted by the brothers. Darrell and Vinnie had a demo of the first song they wrote titled "Ashes to Ashes". Lachman insisted it was on the "backburner" until Cantrell showed interest. The band entered the brothers' backyard studio with Cantrell to record "Ashes to Ashes". Although the song was not completed in time to be featured on New Found Power, it was included on the Japanese version and the soundtrack The Punisher: The Album. To promote New Found Power, the band toured with Hatebreed, Drowning Pool, and Unearth on the second installment of the Headbanger's Ball.
On December 8, 2004, Damageplan was on tour at the Alrosa Villa, a Columbus, Ohio nightclub. Moments into the concert, Nathan Gale, climbed onto the stage and shot Darrell in the head multiple times. Head of Security for the band Jeffery "Mayhem" Thompson engaged in hand-to-hand combat with Gale, which allowed Vinnie Paul Abbott and other members to escape. Thompson, however, was killed. A fan named Nathan Bray attempted to give CPR to Thompson and Darrell, but was shot by the gunman and killed. Roadie Erin Halk, also a former U.S. Marine, was killed when he charged at Gale while he was reloading. Once police arrived, officer James Niggemeyer approached the stage from the side and could see Gale holding a gun to a hostage. With a clear shot, Niggemeyer killed Gale with a single shotgun blast to the head. 15 shots were fired by Gale, and an additional 36 rounds were found on his person.