The Ugly American was an immediate success with the American public. It was on the bestseller list for seventy-eight weeks and went on to sell four million copies. The message of the novel seemed to strike a ready chord amongst Americans who feared that their country was not pursuing the wisest policies abroad and that the Soviet Union might be winning a decisive advantage in the cold war.

Critical reaction, however, was mixed. Robert Trumbull, in the New York Times Book Review, praised the "sharp characterizations, frequently humorous incident and perceptive descriptions" in the book. He offered the opinion that it may act as a "source of insight into the actual, day-by-day by-play of [the] present titanic political struggle for Asia that will engage future historians—unless, of course, the Communists win, and suppress all such books." In contrast to Trumbull, Robert Hatch in The Nation, commented sharply on the book's "easy, surface characterizations," but he had some appreciation for it nonetheless: "[A]t once slick and angry; [the authors] have an awkward way of advocating decency and generosity, to say nothing of intelligence, not for their own sake but because that is the way to beat the Russian game."

In Yale Review, Edward W. Mill commented that his experience as an American diplomat abroad led him to believe that there was much truth in the critique of U.S. policy offered in The Ugly American. He acknowledged the need for more effective training for overseas service but suggested that for such a policy change to be made, there would need to be much more support and understanding of the issue by the American people, Congress, and the nation's colleges and universities. Mill concluded: "If the American people want to be represented by the MacWhites and the Hillandales instead of 'Lucky Lou' and the Joe Bings, they will have to make their wishes clear."

The Ugly American had a pronounced influence on the politics of the day. It was reportedly read by President Eisenhower, who then ordered an investigation of the U.S. foreign aid program. In 1959, then-Senator John F. Kennedy, who was preparing to run for president, and three other unnamed men prominent in public life, sent a copy of the book to every U.S. senator. It was not well received by all. In September, 1959, Senator William Fulbright denounced the book on the Senate floor. He claimed that there were many successful American aid projects in Southeast Asia and complained that "in the world of Lederer and Burdick, almost everything is reduced to idiot simplicity" (quoted in John Hellman's American Myth and the Legacy of Vietnam). The following year Vice President Nixon referred to The Ugly American in a speech at the University of San Francisco. He acknowledged that while some of the charges in the book might be partially correct, the real lesson to be absorbed was the need to understand the strategy of world communism.

One result of the popularity of the book was that the title became part of the American language. The "ugly American" was soon in common usage and referred to a certain type of arrogant American who when abroad did not understand or respect the culture he was in and saw everything through ethnocentric eyes.