UB40 recorded a version of "Red Red Wine" for their album of cover versions, Labour of Love. According to UB40 member Astro, the group's former vocalist and trumpet player, the band were only familiar with Tony Tribe's version and did not realize that the writer and original singer was Neil Diamond. Astro told the Financial Times, "Even when we saw the writing credit which said 'N Diamond,' we thought it was a Jamaican artist called Negus Diamond."

UB40's version features a lighter, reggae-style flavor compared to that of Diamond's somber, acoustic ballad. The UB40 version adds a toasted verse by Astro, opening: "Red Red Wine, you make me feel so fine/You keep me rocking all of the time," which was edited from the single that reached No. 1 on the UK Singles Chart in August 1983 and No. 34 in the U.S. in March 1984.

In 1988, UB40 performed the song at the Nelson Mandela 70th Birthday Concert. Soon after, program director Guy Zapoleon of Phoenix-based KZZP placed the full version, including Astro's "rap", on the station's playlist, and it soon became the station's most popular song. With UB40 ready to release Labour of Love II, A&M Records promotion man Charlie Minor asked UB40 to hold off on releasing the album so that the label could reissue and promote "Red Red Wine." On the Billboard Hot 100 chart of October 15, 1988, the song hit No. 1. In September 2014, the Official Charts Company announced that sales in the UK had reached one million.

Neil Diamond has stated that UB40's "Red Red Wine" is among his favorite covers of his songs. He frequently performs the song live using the UB40 reggae arrangement rather than that of the original version.