The film received highly positive reviews, with Rotten Tomatoes reporting that 35 out of 38 reviews were positive for a score of 92% and a certification of "fresh". Two years after release, Jack Mathews of the Los Angeles Times declared it "critically acclaimed and darn near commercial". In retrospect from 2004, William Arnold of the Seattle Post-Intelligencer said that the film was "widely regarded as Sayles' masterpiece", declaring that it had "captured the zeitgeist of the '90s as successfully as "Chinatown" did the '70s".
Writing at the time of release, Janet Maslin of The New York Times said, "This long, spare, contemplatively paced film, scored with a wide range of musical styles and given a sun-baked clarity by Stuart Dryburgh's cinematography, is loaded with brief, meaningful encounters... And it features a great deal of fine, thoughtful acting, which can always be counted on in a film by Mr. Sayles". "All the film's characters are flesh and blood", Maslin added, pointing particularly to the portrayals by Kristofferson, Canada, James, Morton and Colon. Film critics Dennis West and Joan M. West of Cineaste praised the psychological aspects of the film, writing, "Lone Star strikingly depicts the personal psychological boundaries that confront many citizens of Frontera as a result of living in such close proximity to the border". Ann Hornaday for the Austin American-Statesman declared it "a work of awesome sweep and acute perception", judging it "the most accomplished film of [Sayles'] 17-year career".
However, not all contemporary critics were completely positive. While The Washington Post writer Hal Hinson characterized it as "a carefully crafted, unapologetically literary accomplishment", he said that Sayles' "directing style hasn't grown much beyond that of a first-year film student", declaring the director was "stagnant".
- Lone Star Film & Television Awards: Best Actor, Chris Cooper; Best Director, John Sayles; Best Film; Best Screenplay, John Sayles; Best Supporting Actor, Ron Canada; Best Supporting Actress, Frances McDormand; 1996.
- Belgian Syndicate of Cinema Critics; Grand Prix
- Independent Spirit Awards: Independent Spirit Award; Best Supporting Female, Elizabeth Peña ; 1997.
- Bravo Awards: NCLR Bravo Award Outstanding Actress in a Feature Film, Elizabeth Peña; Special Achievement Award Outstanding Feature Film; 1997.
- Satellite Awards: Golden Satellite Award; Best Motion Picture Screenplay - Original, John Sayles; 1997.
- Society of Texas Film Critics Awards: Best Director, John Sayles; Best Screenplay, John Sayles.
- Southeastern Film Critics Association Awards: SEFCA Award; Best Director, John Sayles; 1997.
- Academy Awards: Oscar; Best Writing, Screenplay Written Directly for the Screen, John Sayles; 1997.
- Bravo Awards: NCLR Bravo Award; Outstanding Actor in a Feature Film, Tony Plana; 1996.
- British Academy of Film and Television Arts: BAFTA Film Award; Best Screenplay - Original, John Sayles; 1997.
- Broadcast Film Critics Association Awards: BFCA Award Best Picture; 1997.
- Casting Society of America: Artios; Best Casting for Feature Film, Drama, Avy Kaufman; 1997.
- Golden Globes: Golden Globe; Best Screenplay - Motion Picture, John Sayles; 1997.
- Independent Spirit Awards: Independent Spirit Award; Best Feature, R. Paul Miller and Maggie Renzil; Best Male Lead, Chris Cooper; Best Screenplay, John Sayles; 1997.
- Satellite Awards: Golden Satellite Award; Best Motion Picture - Drama, R. Paul Miller and Maggie Renzi; 1997.
- Writers Guild of America: WGA Award (Screen); Best Screenplay Written Directly for the Screen, John Sayles; 1997.