Highlight (shade) plot background in specific time range

Here is a solution that uses zoo simply because that makes the subsetting easy. You could do the same with standard indexing as well:

## create a long monthly sequence and a sub-sequence
months <- seq( as.Date("1950-01-01"), as.Date("2009-12-12"), by="month")
subset <- seq( as.Date("1970-01-01"), as.Date("1979-12-31"), by="month")

## generate some random values
set.seed(42)
values <- cumsum(rnorm(length(months)))

## plot as a zoo object, overlay a gray background and overplot a line in red
library(zoo)
Z <- zoo(values, months)
plot(Z)
rect(xleft=head(subset,1), xright=tail(subset,1),
     ybottom=par("usr")[3], ytop=par("usr")[4],
     density=NA, col="lightgray")
lines(Z[subset], col='red')
box()

_{(source: eddelbuettel.com)}

By using par("usr") we avoid the need for explicit values for upper and lower region marks. And the zoo indexing makes finding the start- and endpoints easy. This would work the same way for data in different time resolutions.

You can use the chartSeries() function in quantmod with an xts timeSeries and the addTA() function to add the background highlighting:

addTA(xts(rep(TRUE,length(times)), times), on=-1, col="#333333", border=NA)

Using alpha transparency:

x <- seq(as.POSIXct("1949-01-01", tz="GMT"), length=36, by="months")
y <- rnorm(length(x))

plot(x, y, type="l", xaxt="n")
rect(xleft=as.POSIXct("1950-01-01", tz="GMT"),
     xright=as.POSIXct("1950-12-01", tz="GMT"),
     ybottom=-4, ytop=4, col="#123456A0") # use alpha value in col
idx <- seq(1, length(x), by=6)
axis(side=1, at=x[idx], labels=format(x[idx], "%Y-%m"))

or plot highlighted region behind lines:

plot(x, y, type="n", xaxt="n")
rect(xleft=as.POSIXct("1950-01-01", tz="GMT"),
     xright=as.POSIXct("1950-12-01", tz="GMT"),
     ybottom=-4, ytop=4, col="lightblue")
lines(x, y)
idx <- seq(1, length(x), by=6)
axis(side=1, at=x[idx], labels=format(x[idx], "%Y-%m"))
box()