[4] O'Neill turned the historic Ambassador Hotel of Los Angeles into a haunted mansion full of specters using a mixture of "35mm location shooting and a digital overlay".

[1] While still a work in progress, excerpts were shown at the Los Angeles Museum of Contemporary Art's Ahmanson Theatre in September 2002.

[10] It is set inside the decaying halls of the closed Ambassador Hotel, former home to the Cocoanut Grove restaurant and the first Academy Awards ceremonies.

O'Neill's time-lapse photography lends the film an ethereal effect that serves an intentionally distancing purpose.

[32] Deborah Young of Variety commented that "The attention given to constructing each shot makes for a hypnotic visual experience, while lack of a progressive narrative telescopes film's running time into infinity.

"[34] The Village Voice praised the filmmaker for allowing the Ambassador Hotel, used many times previously as a film set, to represent itself and its own history.

[5] Ed Gonzalez of Slant Magazine felt that "[t]he film's superimpositions, movie-dialogue samples, and audio-visual burps collectively suggest an acid trip, and as such will have a different disorienting effect on everyone who picks up its frequency".

[35] Jonathan Rosenbaum of Chicago Reader called the film a "treasure chest of narrative fragments" which "lacks the itinerary and 'instructions for use' that automatically comes with a linear story."

"[6] TV Guide reviewer Maitland McDonagh gave The Decay of Fiction nearly full marks (3.5 stars out of 4), saying that the result of the film was "hypnotic".