As with all of Colin Hay's music, American Sunshine contains largely personal songs; for example, "There's Water Over You" describes Hay's relationship with his parents. Unlike Going Somewhere, the tracks of American Sunshine are backed by Hay's band. This move away from minimalist, acoustic music is something Colin Hay established with his previous album, Man @ Work. However, Hay performs a great many of these tracks solo at his live appearances.
Allmusic called the album "a cheerfully mellow collection of easy rolling folk-pop", summarizing its mood by commenting that Hay "remains infatuated with what happens under the Southern Californian sun, whether it's rhapsodizing over the state itself or cherishing a flirtation with a shop girl, and it's easy to share his affections thanks to his easy, tasteful tunes."Popmatters also gave a firmly positive assessment of the album, commenting that "Throughout his solo career, Hay has specialized in agreeable, comfortable pop rock in the better sense of the words, and it’s safe to say he’s been getting better as he goes."