The film was a box office success in Quebec and Canada and internationally, and received good reviews. It won the FIPRESCI Prize at the Cannes Film Festival, nine Genie Awards, including Best Motion Picture, and was the first Canadian film nominated for the Academy Award for Best Foreign Language Film. It was followed by two sequels, The Barbarian Invasions in 2003 and Days of Darkness in 2007.
In an interview with CBC Radio, Université de Montréal History Professor Dominique St. Arnaud tells Diane about her new book, Variations on the Idea of Happiness, which discusses her thesis that modern society's fixation on self-indulgence is indicative of its decline, predicting a collapse in the "American Empire," of which Quebec is on the periphery. Several of Dominique and Diane's friends, mostly intellectual history professors at the university, prepare for a dinner later in the day, with the men at work in the kitchen while the women work out at the gym.
As the dinner draws nearer, the men and women mainly talk about their sex lives, with the men being open about their adulteries, including Rémy, who is married to Louise. Most of the women in the circle of friends have had sex with Rémy, though he is not attractive, but they conceal this from Louise to spare her feelings. Louise has been to an orgy with Rémy, but believes he is generally faithful to her in Montreal. The friends are also accepting of their homosexual friend Claude, who speaks about pursuing men reckless of fear of STDs, while secretly being fearful of having one. During the dinner party, the friends listen to Dominique's theories about the decline of society, with Louise expressing skepticism. To retaliate against Louise, Dominique reveals she has had sex with Rémy and their friend Pierre, causing her to have an emotional meltdown. By morning, relationships have gone back to normal.
In the wake of the 1980 Quebec referendum, director Denys Arcand felt Quebec's interests had shifted from politics to "individual pleasures," and with a small budget of $800,000 for his next project, envisioned a dialogue-heavy film like Louis Malle's 1981 film My Dinner with Andre. Arcand viewed sex as the most likely topic that could sustain audience interest for an entire film. He worked on the screenplay throughout the summer of 1984, under the working title Conversations scabreuses. He chose tenured university professors as his subject matter because he felt this such people had less of a Quebecois accent, which would make the film more accessible to French-speaking audiences around the world. He avoided naming local places for the same reason, even though this went against the wishes of the National Film Board of Canada, which co-sponsored the film.
As Arcand worked on the script, producer Roger Frappier saw the story as promising and lobbied René Malo to co-produce, allowing for a bigger budget. Frappier and Malo raised $1.8 million, allowing for more settings depicted in the film. Most of the funding came from the governments of Canada and Quebec.
Arcand had Rémy Girard and Yves Jacques in mind for principal roles after working with them on The Crime of Ovide Plouffe (Le Crime d'Ovide Plouffe) (1984), and named the main character Rémy after Girard. Nevertheless, their lack of celebrity meant Girard had to audition for the part named for him, to satisfy producers.
Filming began in Montreal in August 1985, and moved to Lake Memphremagog in September, finishing in October. Filmmaker Jacques Leduc is given credit for photographing the nature scenes in the film.
In filming sex scenes, Arcand felt visual depictions were overused, which is why he focused on the verbal aspect. He also felt the sex scenes were challenging because of actors' modesty, and sought to place the camera in novel positions.
The film was screened at the 1986 Cannes Film Festival, where it received a 20-minute standing ovation, after which distribution to 60 countries was assured. In Canada, the film premiered in Montreal on 20 June, and opened across the country in September and October.
The film was screened for months in Montreal and Paris and was the highest-grossing film ever in Quebec, making $2.2 million in the province alone. Outside Quebec, the film made $1 million in Canada. In France, it drew an audience of 1,236,322 people, the highest for a Quebec film ever. The film ultimately made $30 million.
Roger Ebert gave the film three stars, saying that despite the sexual dialogue, "the real subject is wit," and comparing it to My Dinner with Andre. Vincent Canby of The New York Times wrote "Not since Alain Tanner's Jonah Who Will Be 25 in the Year 2000 has there been a comedy that so entertainingly and successfully expresses itself through intelligent characters defined entirely in their talk," and called the cast, including Rémy Girard and Pierre Curzi, "excellent." Rita Kempley of The Washington Post found most characters unlikable but wrote "The Decline of the American Empire is certainly the year's most intellectual work, a frequently funny, unrepressed meditation on midnight in North America." Peter Keough of the Chicago Reader wrote "The laughs come easy in Decline, but also a bit guiltily when you recognize that this hip sex comedy is actually a reactionary tract," given what he saw as the ending's victory for "traditional heterosexuality" while the homosexual character had an STD. David Denby of New York magazine panned the film, calling it "pompous and tiresome." In France, many critics highlighted the film's use of Quebec's natural landscape.
The Toronto International Film Festival ranked it in the Top 10 Canadian Films of All Time twice, in 1993 and 2004. Shortly after the release of the sequel The Barbarian Invasions in 2003, the British Film Institute called The Decline of the American Empire "a witty and provocative look at the battle of the sexes." In 2011, marking the 25th anniversary of the film, Isabelle Houde of the Montreal-based La Presse remarked the film was daring for 1986 in portraying homosexuality as normal.
The film won nine Genie Awards in 1987, including Best Motion Picture and Best Director and Best Original Screenplay for Arcand. It also received the FIPRESCI Prize at the Cannes Film Festival.
The film was nominated for the Academy Award for Best Foreign Language Film at the 59th Academy Awards, the first Canadian film so honoured. Its sequel, The Barbarian Invasions (Les Invasions barbares), would go on to win Canada's first Oscar in the category in 2003.
The Barbarian Invasions, released in 2003, uses the same characters as The Decline of the American Empire and presents an aftermath to the ending of the first film, having Rémy's marriage end, and is thus a sequel. Before 2007, critics called the two films, along with Arcand's 1989 film Jesus of Montreal, the "Montreal trilogy" because of their shared setting and allegory. There are also characters from Jesus of Montreal in The Barbarian Invasions.
In 2007, Arcand's film Days of Darkness was released. This film, along with The Decline of the American Empire and The Barbarian Invasions, was considered to complete a trilogy "about where Western civilization stands in the run-up to and the aftermath of the new millennium." The Decline character Pierre, played by Pierre Curzi, also appears in Days of Darkness to update his story from The Barbarian Invasions.