"Lost Horizons" received mostly positive reviews from music critics, although several critics critiqued the album's near-constant mellowness. Stuart Mason of AllMusic called the album "a delightful but slightly faceless blend of lounge pop, subtle beats, found sound, with mellow jazz influences." A reviewer for Entertainment.ie praised the band for approaching electronica from a new angle, writing, "this London-based duo employ Playschool pianos, acoustic guitars and sprightly beats to create laid-back instrumentals guaranteed to soothe even the most restless of souls. [...] What really marks Lemon Jelly as exciting new talents is their quirky sense of humour, which they use to brighten up their sound with skilful use of nursery rhymes, brass bands and offbeat samples." Pascal Wyse of "The Guardian" wrote, "Everything is approachable and purely crafted, but "Lost Horizons" cheats banality with some choice quirks: Magnificent Seven strings, astronauts chatting, panoramic sound effects." Chris Dahlen of "Pitchfork" felt that the album was a little too saccharine at times, but that it is "the perfect disc to throw on after your four-disc "Ultrachill Dub Groove Mix" has put the whole party to sleep. It's like eight flavors of ribbon candy, beach balls hitting the ground like hail, and a big plastic clown face that blows helium."