The band started out experimenting with folk but still heavily country in its style, combining the bluegrass form with which Pittman was familiar with the progressive-themed folk rock Card and Deisler had been accustomed to. Its many members have played a large number of different instruments, including a rich variety of string instruments such as the banjo, mandolin and fiddle. They Deisler explained that it got its name because "I think it was a slang term I'd heard my grandmother use to describe gentlemen of easy virtue who hung around in bars. When we started out, that's just what we were doing — hanging out and playing for beer and tips and stuff like that." The Austin Lounge Lizards began by playing covers, but eventually they wanted to move towards trying to write their own songs.
The sound became less country and progressed more to politically aware songs. The songs they wrote tended to be humorous in an extremely off-beat way, in addition to their political nature, in a way reminiscent of Country Joe McDonald's Fixing to Die Rag. These songs run along the lines of "The Ballad of Ronald Reagan", criticizing the Republican president. One of their most famous songs, "Saguaro", is based on the story of David Grundman, who died shooting up a cactus.