The Dream-Quest of Unknown Kadath was finished at 43,000 words on 22 January 1927. Even while writing it, Lovecraft expressed doubts about its merits: ‘Actually, it isn't much good; but forms useful practice for later and more authentic attempts in the novel form.’ That remark is about as accurate a judgment as can be delivered on the work. More than any other of Lovecraft's major stories, it has elicited antipodally opposite reactions even from devotees: L. Sprague de Camp compared it to George MacDonald's Lilith and Phantastes and the Alice books, while other Lovecraft scholars find it almost unreadable. For my part, I think it is a charming but relatively insubstantial work: Carter's adventures through dreamland do indeed pall after a time, but the novel is saved by its extraordinarily poignant conclusion. Its chief feature may be its autobiographical significance: it is, in fact, Lovecraft's spiritual autobiography for this precise moment in his life.

It is scarcely worth while to pursue the rambling plot of this short novel, which in its continuous, chapterless meandering consciously resembles not only Dunsany (although Dunsany never wrote a long work exactly of this kind) but William Beckford's Vathek(1786); several points of plot and imagery also bring Beckford's Arabian fantasy to mind. Lovecraft resurrects Randolph Carter in a quest through dreamland for his ‘sunset city’, which is described as follows:

This certainly sounds—except for some odd details at the end—like some Dunsanian realm of the imagination; but what does Carter discover as he leaves his hometown of Boston to make a laborious excursion through dreamland to the throne of the Great Ones who dwell in an onyx castle on unknown Kadath? Nyarlathotep, the messenger of the gods, tells him in a passage as moving as any in Lovecraft: