The band has played in a number of different styles, but most often their music can be described as a mix of Celtic folk music with rock and roll, or folk rock. After ten years of recording and touring, the band dissolved in 1993 and Scott pursued a solo career. The band reformed in 2000, and continues to release albums and tour worldwide.

Scott himself emphasizes a continuity between The Waterboys and his solo work, saying that "To me there's no difference between Mike Scott and the Waterboys; they both mean the same thing. They mean myself and whoever are my current travelling musical companions."

The early Waterboys sound was dubbed "The Big Music" after a song on their second album, A Pagan Place. This musical style was described by Scott as "a metaphor for seeing God's signature in the world." It either influenced or was used to describe a number of other bands, including Simple Minds, The Alarm, In Tua Nua, Big Country, the Hothouse Flowers and World Party, the last of which was made up of former Waterboys members. In the late 1980s the band became significantly more folk influenced.

The Waterboys eventually returned to rock and roll, and have released both rock and folk albums since reforming. Their songs, largely written by Scott, often contain literary references and are frequently concerned with spirituality. Both the group and its members' solo careers have received much praise from both rock and folk music critics, but The Waterboys as a band has never received the commercial success that some of its members have had independently. Aside from World Party, The Waterboys have also influenced musicians such as Colin Meloy of The Decembrists Grant Nicholas of Feeder and Miles Hunt of The Wonder Stuff., and both Bono and The Edge from U2 are fans of the band.