In the December 1993 issue of Select magazine, Johnny Marr said: "Strangeways suffers because it was our last record, so people think there were arguments and horrors in making it, but there weren't. Morrissey and I both think it's possibly our best album. That and some of The Queen Is Dead, which accepted opinion says is our masterpiece. That might be true, but Strangeways has its moments, like 'Last Night I Dreamt That Somebody Love Me.' Last time I met Morrissey he said it was his favorite Smiths song."

The song was edited for the single release, losing the piano introduction found on the album version. The album version starts with 2 minutes of noise from the 1984-85 miners' strike (supplied by a BBC sound effects album) accompanied by some maudlin piano chords. The miners strike was a major industrial action affecting the British coal industry. The defeat of the miners significantly weakened the British trades union movement.

The cover of the single features Billy Fury.

The album takes its title from a combination of Manchester's now renamed Strangeways Prison, and the line "Borstal, here we come" from the movie Billy Liar.

David Bowie said that this is his favorite Smiths song. He told Q in 1992: "I still rate Morrissey as one of the best lyricists in Britain." In 2003, Outkast's Andre 3000 told MTV that he wished he wrote this song: "I personally wish I would have written that Smiths song 'Last Night I Dreamt That Somebody Loved Me.' Genius song. This girl named Hannah in Atlanta turned me on to them. 'Cause I was telling her that I loved The Hives and The Buzzcocks and she said, 'Hey, you need to check these guys out.'"