Critics have been divided on The Good Terrorist. Elizabeth Lowry highlighted this in the London Review of Books: "[Lessing] has been sharply criticised for the pedestrian quality of her prose, and as vigorously defended". The Irish literary critic Denis Donoghue complained that the style of the novel is "insistently drab", and Kuehn referred to Lessing's text as "surprisingly bland". Lowry noted that the English academic Clare Hanson defended the book by saying that it is "a grey and textureless novel because it ... speaks a grey and textureless language".
Freeman on the other hand called the book a "graceful and accomplished story", and a "brilliant account of the types of individuals who commit terrorist acts". Writing in the Los Angeles Times Freeman said Lessing is "one of our most valuable writers" who "has an uncanny grasp of human relationships". In a review in the Sun-Sentinel, Bonnie Gross described the novel as "rewarding reading" and Lessing's "most accessible" book to date. She said it is the author's "strong descriptive prose and her precise and realistic characterizations" that makes this book "remarkable". Gross felt that while some of the male characters are not that strong, the female characters are much better developed, particularly Alice, whom she found memorable.
Amanda Sebestyen wrote in The Women's Review of Books that at first glance the ideas in The Good Terrorist appear deceptively simple, and the "plot-clinchers come almost insultingly pat". But she added that Lessing's strength is her "stoic narrat[ion] of the daily effort of living", which excels in the way she describes day-to-day life in a squat. Sebestyen also liked the book's depiction of Alice, who "speak[s] to me most disquietingly about myself and my generation". In a review in off our backs, an American feminist publication, Vickie Leonard called The Good Terrorist a "fascinating book" that is "extremely well written". She said the characters are "exciting" and "realistic", and that Lessing "accurately portrays the way political ideas both rule one's life and, at the same time, disappear in the minutiae of daily living". Leonard added that even though Alice is not a feminist, the book illustrates the author's "strong admiration for women and their accomplishments while being uncomfortable with feminist ideology".
Writing in The Guardian, Rogers described The Good Terrorist as "a novel in unsparing close-up" that examines society through the eyes of individuals. She said it is "witty and ... angry at human stupidity and destructiveness, both within the system and without". She liked the book's "compulsive power of the story-telling", and said that in the context of recent terrorist attacks in London, it is an example of "fiction going where factual writing cannot". A critic in Kirkus Reviews wrote that Alice's story is "an extraordinary tour de force—a psychological portrait that's realistic with a vengeance". The reviewer added that while Alice is "self-deluding" and "not an easy character to spend time with", the novel "is strong as a diagnostic study of political motivation", and "stronger still as an uncannily authentic character-study".
Donoghue wrote in The New York Times that he did not care much about what happened to Alice and her comrades. He felt that the characters "have only the life of borrowed routine and inherited whim", and that Lessing presents Alice as "an unquestioned rigmarole of reactions and prejudices", which leaves no room for any further interest. Donoghue complained that Lessing "hasn't worked her imagination or played it to the point of deciding whether Alice and her friends are the salt of the earth or its scum". In a review in the Chicago Tribune, Kuehn felt that the work "creates almost no effect ... the climax fails to shock the reader and the book never reverberates in the mind". He said Lessing's real interest here are her characters, but complained that they are too "trivial or two-dimensional or crippled by self-delusions" to be interesting.
The Good Terrorist was shortlisted for the 1985 Booker Prize, and in 1986 won the Mondello Prize and the WH Smith Literary Award.