When "The Man Who Lived Underground" was published in the anthology Cross Section in 1944, there was not yet a large reading public accustomed to reading works by African-American authors. It was assumed that a black writer could write only about race, from only one point of view, and for a primarily black audience. In Wright's case, his early reviewers had read Native Son, and most approached "The Man Who Lived Underground" with the assumption that they already knew what it was about. In a 1944 review in the Chicago Sun, Sterling North wrote, "As an enthusiastic Wright fan of several years standing I may perhaps be permitted to point out that Wright is still doing variations on the same theme.'' Most reviewers read the story as one of a black man suffering under white oppression, and went about supporting that view. A rare exception was Harry Hansen of the New York World Telegram, who read Fred Daniels's flight as a "symbolic mission" transcending merely racial or political intent.

Over the next fifteen years, Cross Currents went out of print, and Wright published several more books and stories. "The Man Who Lived Underground'' faded from public consideration until it was published again in Wright's posthumous collection Eight Men. All of the significant criticism of the story follows its publication in Eight Men. While the volume as a whole was not as well received as much of Wright's earlier work, "The Man Who Lived Underground" was immediately and nearly consistently hailed as a masterpiece. Of all of Wright's short fiction, this story has been the most studied and the most admired.

For critics in the second half of the twentieth century, the factor of Fred Daniels's race is less important than his humanity. For these readers, Daniels's struggle transcends race and the social climate for African Americans in the United States. Comparing the story to Wright's novel Native Son, Shirley Meyer writes in Negro American Literature Forum that "While Bigger Thomas gains his identity... by defying white society, Fred Daniels gains his identity on a universal level by identifying with all men." Earle V. Bryant agrees that the story "is essentially concerned with personality and its transfiguration" in an essay in CLA Journal, but he reminds readers that it is racism that drives Daniels underground.

Critics during the 1960s and 1970s struggled with the question of whether' "The Man Who Lived Underground" was a naturalistic or existentialist work. As the drive to categorize literature so strictly waned in the 1980s and 1990s, criticism of the story acknowledged that part of the story's strength comes from Wright's deft handling of material of both traditions. Patricia D. Watkins, writing in Black American Literature Forum, explains the paradox of "the story's simultaneous existence as a naturalistic (thus deterministic) fable and an existential (thus anti-deterministic) fable." Yoshinobu Hakutani finds, in effect, that all of the critics who admire the story for different reasons are correct. He finds both a story of one man's struggle with racism and a universal story of identity, both naturalism and existentialism, in a "subtle fusing of various intentions" that "has an affinity with Zen-inspired writing." In short, he finds that Wright knew what he was doing, and that "he succeeds in making his racial and universal themes intensify each other."