The Rez Sisters was first performed at the National Canadian Centre of Toronto on November 26,1986. Critical response to the play was overwhelmingly positive. In a 1987 edition of Canadian Fiction Magazine, Daniel David Moses stated, "The majority of Native people, forced to inhabit ignored, economically disadvantaged areas called reserves, are not encouraged to regard their own lives as important. The accomplishment of The Rez Sisters is that it focuses on a variety of such undervalued lives and brings them up to size." Thomas King, who published an excerpt from the play in his anthology All My Relations: An Anthology of Contemporary Canadian Native Fiction, applauded Highway for his portrayal of the "rez" community and his ability to present a community as "the intricate webs of kinship that radiate from a native sense of family."

Highway has also received acclaim for his positive and optimistic look at his characters, as well as the way that he presents the inner lives of these women to the audience. Carol Bolt, writing in Books in Canada called the play a "freewheeling, unforgettable journey in terrific company, The Rez Sisters, all of them full of energy and honesty and dreams and life.'' Writing in a 1990 edition of the Canadian Theatre Review, William Peel echoed Bolt by saying that Highway "has carved out a number of memorable portraits" and that his "achievement lies not only in the characters he has created, but in his masterful orchestration of the action through which these characters are revealed." Indeed, his skill at characterization has won Highway his greatest acclaim: in Canadian Literature, Denis W. Johnston states, "A reading of some of the women's individual stories—a character's 'through-line' in theatrical terminology—will help to demonstrate how the strength of the play depends on cyclical character journeys rather than on the plot line."

Praise has also been sung for Highway's ability to emphasize the culture of his Native characters in a manner that is accessible to non-Native audiences. John Bemrose, writing in Maclean's called Highway a playwright "who has learned to straddle two worlds with more grace than most people manage in one." The Toronto Globe and Mail's Conlogue praised Highway's art on similar grounds, stating that "Highway embodies the customary contradictions of living in two worlds at once, native and white, but he embodies them with a special intensity because, simply put, he is outrageously talented.'' Johnston remarked that although the play is one that is concerned with Native women, it is also a play with a universal message "about people and their dreams and their fears. That these people happen to be Native women, reflecting some problems of their particular place in contemporary society, asserts one feature only of the play's appeal,"

When The Rez Sisters was brought to the New York Theater Workshop in New York City, it received a negative review in the influential New York Times. As critic David Richards wrote: “All of the play's shortcomings, and none of [Highway's] assets, are readily apparent ... [Highway] plots scenes clumsily and states points baldly. When the dialogue is supposed to be ribald, it rarely rises above the level of adolescent bathroom humor." However, Richards's review mainly finds fault with the production rather than the play: "the drama, which has won numerous awards in Canada, has to be more surprising than this ramshackle staging would suggest." He further stated that "Mr. Highways' strongest gift, an ability to capture flamboyant personalities with their defenses down, remains largely unexploited" because "few of the [actresses] show any signs of theatrical sophistication. Raw gusto, more than anything else, distinguishes their collective endeavors."

Despite such negativity, Highway's ability to offer a glimpse of Native life without alienating non-Native audiences is one of the reasons why the play was nominated for—and awarded—the Dora Mavor Moore Award for best new play of the 1986-87 Canadian theater season. (The play was also chosen as a runner-up for the Floyd S. Chalmers Award for outstanding Canadian play of 1986). In addition to these prizes, The Rez Sisters was selected (in 1988) as one of only two productions to represent Canada at the Edinburgh Festival.