Frontman Brian Molko, who is known to be a fan of the band Sonic Youth, references lyrics from their album Sister on "Plasticine" ("Beauty lies inside the eye of another youthful dream" directly references "Beauty lies in the eyes of another's dream" from Sonic Youth's "Beauty Lies in the Eye").
The album has several songs based on a theme of relationships, such as relationships that end badly ("The Bitter End"), power struggles in relationships ("Special Needs") or the idea that some are meant to be eternal soulmates (the title track). Brian Molko told Kerrang! magazine: "I'm looking back to what's happened in my past emotional decade, trying to understand it. Trying to exorcise the ghosts and the demons of relationships past. It's the old cliché of it being therapeutic but it does work for me in that way."
Another interview has Molko explaining:
The album title's about carrying the ghosts of your relationships with you, to the point where sometimes a smell or a situation or an item of clothing they bought brings a person back. For me it's about the relationship that you have with your memories. They inhabit your dreams sometimes. There can be a lot in the future that's gonna remind you of the ghost of relationships past. So I see the album as a collection of short stories about a handful of relationships. Most of them mine. In a way writing the songs helps me to get a lot of the nasty feelings off my chest and put them in a box, and therefore have a bit more of an objective discourse with those emotions because you've done something positive with them, you've rid yourself of them.
The album was released with the Copy Control protection system in some regions.
A Special Edition version of the album was released on 22 September 2003 worldwide, featuring a diverse selection of cover versions that the band had recorded in previous years. This was re-released as a download-only album in 2007 under the name Covers.
Sleeping with Ghosts was generally well received by critics.
Pitchfork wrote, "No peaks, no gorges, just a steady oscillation between adequate and inspired. Sleeping with Ghosts is a remarkably level collection of guitar pop, simultaneously less glammy and less pungent than Placebo's earlier stuff."Mojo wrote, "There's some terrific and accessible stuff here [...] but the result is still an album that retreads old Placebo themes."