Eddie Van Halen recalled how the album came about: When we came off the Fair Warning tour last year [1981], we were going to take a break and spend a lot of time writing this and that.

During the band's bar-playing days, vocalist David Lee Roth bought a budget label Kinks double album, and Van Halen learned all of the songs on one side to use as staples of their set.

Roth explained the ban as the result of complaints that it made fun of "an almost theological figure", the Samurai warrior (played by bassist Michael Anthony), and also because two little people appeared to molest a woman (actually a Los Angeles area transgender performer).

[6] Roth, who thought the music Eddie Van Halen came up with sounded Mexican (Montoya was actually Spanish), wrote lyrics intended to evoke that nation.

[citation needed] Covering "Big Bad Bill (Is Sweet William Now)" was Roth's idea, as was having Eddie and Alex Van Halen's father Jan play clarinet on the track.

"[8] While impressed by Roth's creative marketing spin, manager Noel Monk also explained the sexual double-entendre "dive her down" in his 2017 band memoir Running with the Devil.

The back cover of the album features a photo by Richard Aaron of Van Halen on stage at the Tangerine Bowl in Orlando, Florida, that was taken on October 24, 1981, as they concluded a set opening for The Rolling Stones.

He enjoyed how several "mid-60s classics" were customized into vehicles for the band's "high-octane assault", further highlighting the three instrumentals for adding "spice", and how the original songs "rework unorthodox metal dictums with a twist".

[25] Lincoln Journal Star critic Bart Becker named Van Halen the best heavy metal band partly for their tongue-in-cheek style, adding that besides some original songs, the group "forges heavy-metal" out of "unexpected elements" such as country blues, doo-wop, a cappella, clarinets, and the Roy Orbison and Marvin Gaye covers.

[22] Cynthia Rose of New Musical Express praised Templeman's production for holding the experiments – namely the acoustic intros, "planes" of synthesiser, clarinet parts, a cappella singing and "some throwaway humour" – in "expert balance", and wrote that while a quarter of the album is filler, Roth's voice suits the crass lyrics.

[26] Steve Smith of The Times stated that Diver Down continues the band's "four-year tradition of recycling old songs ... without adding anything new, save some heavy-metal chording and David Roth's snarling vocals."

[27] Parke Puterbaugh of Rolling Stone notes that if listeners disregard the five cover versions and three instrumentals, Diver Down "suddenly seems like a cogent case for consumer fraud.

[10] Robin Smith of Record Mirror wrote in his review: "Reworking three old standards and messing around on the flip side doesn't make a great album – and Van Halen should have produced an earthquake.

"[16] Bill Carlton of Daily News commented that while the album is naturally heavy on energetic rock songs, Van Halen also proved capable of the "lovely neo-classical" piece "Cathedral".

[12] In Sounds, Sandy Robertson criticised the new material, calling the songs "a curious lucky bag", and felt that side two was "so mixed up", overall believing the album should have been a more coherent statement.

[11] In a retrospective review, Stephen Thomas Erlewine of AllMusic called Diver Down "one of Van Halen's best records, one that's just pure joy to hear", saying it hearkens back to the exuberance and lightheartedness of their early albums while retaining the tightly knit and practiced playing honed over the length of their career.

[18] Dave Queen of Stylus Magazine noted that with its "additional fragments, sketches, and impenetrable arcana," Diver Down is "like an 'unofficial' Fall release or Smiley Smile.

"[13] Colin Larkin, writing in The Encyclopedia of Popular Music (1997), names Diver Down the weakest Van Halen album, praising only the covers of 1960s standards as the standout tracks.

[24] In his reference book Copendium (2012), Julian Cope dismissed Diver Down as "bar band filler of the most abject variety (how can I live without more covers of 'Pretty Woman', 'Dancing in the Street' and 'Where Have All the Good Times Gone'?

[30] In rankings of the band's albums, Diver Down has been ranked seventh best by Matthew Wilkening of Ultimate Classic Rock and the staff of Consequence,[31][32] and ninth best by Eduardo RivadavIa of Loudwire,[33] Wilkening says that while Diver Down is "easily the most criticized" of the Van Halen albums fronted by Roth, it has a consistent summery feel, "thanks partially to the series of amazing guitar interludes that turn up between tracks".

[31] Consequence write that Van Halen "went pop" for Diver Down, in contrast to the aggression of Fair Warning, and that as such it is sometimes dismissed by fans of the group's harder material.