Sledgehammer features claymation, pixilation, and stop motion animation created by Aardman Animations and the Brothers Quay. The video ends with a large group of extras jerkily rotating around Gabriel, among them: Gabriel's daughters Anna and Melanie, the animators themselves, and director Stephen Johnson's girlfriend. Also included were six women who posed as the back-up singers of the song. Many of these techniques had been employed in earlier music videos, such as Talking Heads's 1985 hit "Road to Nowhere", also directed by Johnson. The style was later used in the video for another successful single from the album So, "Big Time (Peter Gabriel)".
The video won nine MTV Video Music Awards. It was ranked at number four on MTV's 100 Greatest Music Videos Ever Made and is the most played music video on MTV. The video was also voted number seven on TMF's Ultimate 50 Videos You Must See. It ranked at number 2 on VH1's "Top 20 Videos of the 80's" as well as being named the #1 "Amazing Moment in Music" on the Australian TV show 20 to 1 in 2007. "Sledgehammer" was sampled for the 1991 sampled 3rd Bass' hit song "Pop Goes the Weasel". The 1993 Naughty by Nature's song "Hip Hop Hooray" also samples the shakuhachi intro. The video was parodied in "Weird Al" Yankovic's "UHF" video.