When Palko was released from the hospital at eighteen, he pursued a career as a rapper, giving himself the stagename "Alex", after the protagonist of Anthony Burgess' novel A Clockwork Orange. After hiring a manager and recording a demo, he was introduced to rapper Pete Nice, and Cage was featured on the 1993 album Dust to Dust. Pete Nice also introduced Palko to radio personality Bobbito Garcia, who featured Palko on his program several times, increasing his reputation among New York's underground hip hop scene, where he became associated with KMD, Kurious Jorge, K-Solo, Godfather Don, Necro, Artifacts, Pharoahe Monch and El-P. Palko signed a recording contract with Columbia Records, but frequently recorded while intoxicated, and the label found his efforts to be unsatisfactory. Palko briefly put his career on hold and his drug use increased.  When Garcia founded the label Fondle 'Em Records, he offered Palko a record deal, and Cage released a single featuring the songs "Radiohead" and "Agent Orange" in 1997, to success and acclaim. Following the release of The Slim Shady EP in December 1997, Palko accused Detroit-based rapper Eminem of imitating his style.  After several more singles with Fondle 'Em, Palko met Mr. Eon and DJ Mighty Mi of The High & Mighty, and the trio formed the group Smut Peddlers, releasing the album Porn Again on Rawkus Records in 2001. The album peaked at #10 on the Billboard Heatseekers chart, #43 on the Top R&B/Hip-Hop Albums chart, and #184 on the Billboard 200, while its single "That Smut" peaked at #9 on the Hot Rap Singles chart and #96 on the Hot R&B/Hip-Hop Singles & Tracks chart. In 2001, Palko's music was featured on the soundtrack to the psychological crime film Bully.

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When Garcia founded the label Fondle 'Em Records, he offered Palko a record deal,