Collins sings the song from a third-person perspective, observing as a man crosses the street to ignore a homeless woman, and he implores listeners not to turn a blind eye to homelessness because, by drawing a religious allusion, "it's just another day for you and me in paradise". Collins also appeals directly to God by singing: "Oh lord, is there nothing more anybody can do? Oh lord, there must be something you can say?"
The song was another huge hit for Collins. On 23 December 1989, it became his seventh (and to date, final[update]) number-one single in the United States. The song was also the final number-one song of the 1980s in the US, and remained at number one for four weeks, which sometimes classifies the song as a hit from the 1990s as well. It also saw out the 1980s and saw in the 1990s at the top of the German singles chart. The song had already reached number two in the UK in November of that year. The single version is slightly different from the album version in that it uses a shorter intro. David Crosby also appears performing backing vocals.
Popular music historian Colin Larkin wrote that "Another Day in Paradise" had been "widely criticised". Collins addressed the criticism from the English rock press, who found him unqualified to sing about the poor due to his wealth, by saying: "When I drive down the street, I see the same things everyone else sees. It's a misconception that if you have a lot of money you're somehow out of touch with reality."
Writing for the BBC, David Sheppard described the song's lyrics as "cringe-worthy". Caroline Sullivan of The Guardian dismissed the track as "a song that addressed the issue of homelessness with the same insight as Sporty Spice's If That Were Me."Andrew Collins described the song as a "bland redress" for the subject of homelessness in the New Statesman. Singer-songwriter and political activist Billy Bragg was also scathing, claiming: "Phil Collins might write a song about the homeless, but if he doesn't have the action to go with it he's just exploiting that for a subject."
Writing for MSN, Hugh Wilson contrasted Collins's concern for the homeless in the song with his concern as a multimillionaire at the prospect of the UK's election of a tax-raising socialist government. Referring to Collins's statement that he would consider leaving the UK with the election of a Labour government, Wilson noted that the song led to "accusations of hypocrisy" because Collins had "bemoaned the plight of the homeless" in it. Wilson also said Collins became "an easy target when future elections came round".
A prominent bass guitarist, Leland Sklar contributed to "Another Day in Paradise".
Less than six months after the release of the original Phil Collins version, a cover version by dance act Jam Tronik was released in the UK. In April 1990 it reached its peak position of number 19 on the UK Singles Chart. It also featured on volume 17 of the popular UK series Now That's What I Call Music!. Sampled in this version is the drum loop from the 1988 Raze song "Break 4 Love".
In 2011, the song was covered by the charity ensemble Les Enfoires, translated to French and entitled d'Un jour de Plus au Paradis, at their concert Dans l'oeil des Enfoires. It was later released as a single.
In 2012, an accapella version of the song was performed by Brad Arnold, lead singer of American rock band 3 Doors Down, at the Manchester Academy show of the band's Time of My Life world tour. On the last show of the European segment of the tour, lead singer of Seether, Shaun Morgan, joined Arnold on stage at the Hammersmith Apollo in London to perform an acoustic cover of the song.
Argentinian singer Miguel Mateos recorded a version of the song that was included on "La 100 FM"'s album.
Rapper Berner sampled this song for his early 2013 release "Paradise" featuring Wiz Khalifa.
The Voice contestant Jonny Gray of Austin, Texas, covered the song with an indie tone on November 11, 2013 while also playing acoustic guitar.