The New Rolling Stone Album Guide called the song "an insinuating bit of bar-band mythmaking" whose lyrics "paint a vivid picture of an overlooked and underappreciated pub combo". Ken Tucker of Rolling Stone singled out "Sultans of Swing" as a highlight of the album for its "inescapable hook" and compared Knopfler's vocal stylings to those of Bob Dylan. Knopfler used the guitar technique of finger picking on the recording. "Sultans of Swing" was re-recorded in February 1978 at Basing Street Studios for the debut album Dire Straits, produced by Muff Winwood. Two months later, Dire Straits signed a recording contract with Phonogram Records. Gillett liked the music and put "Sultans of Swing" on his rotation. They took the tape to the influential DJ Charlie Gillett, presenter of Honky Tonk on BBC Radio London, hoping for advice. Shortly after Dire Straits formed in 1977, they recorded a five-song demo tape at Pathway Studios, including "Sultans of Swing". Knopfler used similar triads on " Lady Writer". All the chords are compatible with a D natural minor scale, except for the A major triad, which suggests a D harmonic minor scale. The song employs the Andalusian cadence or diatonic phrygian tetrachord. The riff uses triads, particularly second inversions. It uses a chord progression of Dm–C–B ♭–A for the verses, and F–C–B ♭ for the choruses. It is in the key of D minor with Knopfler's vocal range spanning G 2 to D 4. The song is set in common time, with a tempo of 149 beats per minute. At the end of their performance, the lead singer announced their name, the Sultans of Swing Knopfler found the contrast between the group's dowdy appearance and surroundings and their grandiose name amusing. The lyrics were inspired by a performance of a jazz band playing in the corner of an almost empty pub in Deptford, South London. the new chord changes just presented themselves and fell into place." He thought the song was "dull" until he bought his first Stratocaster in 1977: "It just came alive as soon as I played it on that '61 Strat.
"Sultans of Swing" was composed by Mark Knopfler on a National Steel guitar in open tuning.