[4][5] The writing of "Time Out of Mind" took place amid the worsening drug addiction of Walter Becker, who co-wrote the song with his bandmate Donald Fagen.

Mark Knopfler, the Dire Straits guitarist hired to play on the track, described his experience recording the part as "painstaking".

Backing vocalist Michael McDonald and drummer Rick Marotta were regular collaborators, while keyboardist Rob Mounsey had not worked with them before.

[8] He described the experience as "painstaking" and "like getting into a swimming pool with lead weights tied to your boots", although he, Becker, and Fagen were ultimately pleased with the results.

"[10] In 1980, as "Time Out of Mind" was undergoing rigorous mixing, the tape containing the song began shedding significantly due to repeated plays.

[11] To avoid destroying the tape altogether, Fagen and Scheiner had to limit the number of times they ran it again while finishing the mix.

[8] "Time Out of Mind" was described by Jeff Giles of Ultimate Classic Rock as consisting of "sunny horn charts, [a] minimalistic, toe-tapping beat ... and [a] deceptively dark singalong chorus".

Stewart Mason of AllMusic called it "a barely veiled song about heroin", citing a lyric in the chorus that makes reference to "chasing the dragon" and a line in the second verse about a "mystical sphere ... direct from Lhasa".

"[18] In his book Major Dudes, critic Barney Hoskyns similarly remarked on this juxtaposition, calling the song "an oddly cheery junkie classic".

[23] In his Ultimate Classic Rock write-up of the song, Jeff Giles reworded the phrase as time "out of one's skull", a state of "disconnected bliss" achieved through drugs.

[25] In a review of the album, Richard Cromelin of the Los Angeles Times assessed the song as "a piece of catchy, propulsive pop that reveals little but conveys much".

[20] A 1981 issue of Record World gave an approving description of the single after its release, calling it "a box of mixed chocolates ... offer[ing] an aural array of rich keyboard/guitar figures—all by a star-studded cast.

[8] In a retrospective review of the song, AllMusic critic Stewart Mason echoed Evans's criticism, calling the song's guitar "lackluster" and saying: "[F]or some odd reason, it's mixed well behind the rest of the arrangement, so far back that the listener has to pay careful attention even to hear it properly; worse yet, it's not a particularly memorable solo, and it's so lacking in Knopfler's usual distinctive style that even a Dire Straits fan probably couldn't guess it was him without looking at the credits.