"Don't Dream It's Over" became the band's biggest international hit, reaching No. 2 on the Billboard Hot 100 in the United States in April 1987. "Don't Dream It's Over" was also a great success in Neil Finn's native country New Zealand where it peaked at No. 1, it also topped the charts in Canada, while in Australia it peaked at No. 8. In Continental Europe, it reached No. 6 in Norway, No. 7 in the Netherlands, and No. 13 in Germany. In America the single was topped only by "I Knew You Were Waiting (For Me)" by Aretha Franklin and George Michael.
The music video, directed by Alex Proyas, features some surreal special effects such as household objects – including shattering crockery – and film reels that float in the air, with lead singer Finn playing a guitar and walking through the same house during different time periods while his bandmates are either performing household chores or playing various backing instruments. It was nominated for Best Group Video, and Best Direction at the 1987 MTV Video Music Awards, and earned the group a Best New Artist award.
Rapper Classified has sampled the riff on the song "It Ain't Over", as have Irish R&B trio Dove on their hit "Don't Dream", which became one of Ireland's biggest songs of that year and also reaching the UK Top 40.". Italian singer Antonello Venditti included his own re-written version of "Don't Dream it's Over" – "Alta Marea" – on his 1991 album Benvenuti in Paradiso, which became a hit in Italian charts; Angelina Jolie, who was then sixteen, played a seductress in the video.