The "Sledgehammer" video was commissioned by Tessa Watts at Virgin Records, directed by Stephen R. Johnson and produced by Adam Whittaker. Aardman Animations and the Brothers Quay provided claymation, pixilation, and stop motion animation that gave life to images in 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 "Big Time", another single from So.

Gabriel lay under a sheet of glass for 16 hours while filming the video one frame at a time. "It took a lot of hard work," Gabriel recalled. "I was thinking at the time, 'If anyone wants to try and copy this video, good luck to them.'" Two dead, headless, featherless chickens were animated using stop-motion and shown dancing along to the synthesised shakuhachi solo. This section was animated by Nick Park, of Aardman Animations, who was refining his work in plasticine animation at the time. The video ended with a large group of extras jerkily rotating around Gabriel, among them his daughters Anna-Marie 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.

"Sledgehammer" won nine MTV Video Music Awards in 1987 the most awards a single video has won. It ranked at number four on MTV's 100 Greatest Music Videos Ever Made (1999). "Sledgehammer" has also been declared MTV's number one animated video of all time. The video was voted number seven on TMF's Ultimate 50 Videos You Must See, which first aired 24 June 2006. It ranked at number 2 on VH1's "Top 20 Videos of the '80s" and number one on "Amazing Moment in Music" on the Australian TV show 20 to 1 in 2007. It won Best British Video at the 1987 Brit Awards and was nominated for the Best Music Video category for the first annual Soul Train Music Awards in that same year.