After almost two years of initial commercial failure for Eurythmics, this album became a commercial breakthrough for the duo on both sides of the Atlantic. The title track became particularly popular, and it remains one of Eurythmics' most recognisable songs; its music video, popular on MTV in the United States, is memorable for Annie Lennox's gender-bending imagery. In the wake of this success, the single "Love Is a Stranger", previously a flop, was re-released and became a hit as well. It too was accompanied by a striking video, which featured Lennox dressed both as a man and a woman.
The album was re-released in 2005 with the rest of the Eurythmics' studio catalogue (excluding the 1984 (For the Love of Big Brother) album, to which Virgin Records holds the rights). The recordings were remastered and several bonus tracks were added to each of eight albums. In this release Sweet Dreams (Are Made of This) acquired six bonus tracks.
Dave Stewart, together with Robert Crash and ex-The Selecter bassist Adam Williams, produced the album in Eurythmics' own relatively primitive 8-track studio, winning awards for the quality of the recording which belied its low-budget origins. Sweet Dreams saw the duo move away from the psychedelic, guitar-tinged band-oriented sound of their 1981 debut album In the Garden, instead focusing on raw analogue synthesizers (including the Oberheim OB1 and EDP Wasp) and drum machines (particularly the Movement Systems Drum Computer, which featured a graphic visual display of the drum patterns). Whilst the "synthpop" genre had grown in popularity in the preceding years, it was often associated with all-male groups and somewhat clinical, emotionless music. Eurythmics (particularly with Lennox's vocal stylings) brought a soul music twist to the electronic sound, which proved popular with broader audiences.
Early Australian, German and US CD releases (printed in Japan) and the 2005 reissue version of this album have a slightly longer version of "This City Never Sleeps". The length of 6:41 is due to some mixed sound effects and a backmasked message by David A. Stewart saying, "I enjoyed making that there record. Very good, very good" that total 21 seconds. This message also appears on original UK vinyl pressings.
During 1982 Eurythmics recorded many tracks which ended up as B-sides of singles or as alternative versions of other songs. Tracks such as "Step on the Beast", "Invisible Hands", "Dr. Trash", or the alternative versions of "The Walk" have not been released on CD yet and any future plans for re-release are unknown at this time. However these tracks can now be heard through YouTube.