Artistically, Lost Horizon evokes many of the themes associated with Capra as an auteur but is somewhat darker and at times, cynical, as with much of his early work.
Initially anxious to return to "civilization", most of the newcomers grow to love the place, including academic Alexander Lovett (Edward Everett Horton), swindler Henry Barnard (Thomas Mitchell), and terminally ill Gloria Stone (Isabel Jewell), who miraculously seems to be recovering. High-ranking British diplomat Robert Conway (Ronald Colman) is also enchanted, particularly when he meets Sondra (Jane Wyatt), who has grown up in Shangri-la. However, Conway's younger brother George (John Howard) and Maria (Margo), another beautiful woman they find there, are determined to leave.
Conway eventually learns that his arrival was no accident. He was brought there by the High Lama to take his place. The founder of Shangri-la claims to be hundreds of years old, preserved, like the other residents, by the magical properties of the paradise he has created, but is finally dying and needs someone wise and knowledgeable in the ways of the modern world to keep it safe.
George refuses to believe the Lama's fantastic story and is backed up by Maria. Torn between love and loyalty, Conway reluctantly gives in to his brother and they leave, taking Maria with them. After several days of gruelling travel, she becomes exhausted and falls face down in the snow. When they turn her over, they discover that she has died...of extreme old age. Her departure from Shangri-la had restored Maria to her true age. Horrified, George loses his sanity and jumps to his death.
Conway continues on and eventually meets up with a search party sent to find him, though the ordeal has caused him to lose his memory of Shangri-la. On the voyage back to England, he remembers everything; he tells his story and then jumps ship. The searchers track him back to the Himalayas, but are unable to follow him any further. In the final scene, Conway returns to Shangri-la, to the waiting Sondra.
No complete original print of this movie is known to have survived, as several reels of the original nitrate negative deteriorated in the late 1960s. Several years after its initial release, an "edited" version was presented, which aimed to downplay the supposedly Communist themes associated with utopia, as well as to limit the sympathy shown towards the Chinese, whose relationship with the American government grew strained in the years following World War II. A total of twenty-seven minutes was cut.
A combination of the collapse of the production code and an interest in restoring old films resulted in an attempt in the 1970s to find an original print of the film. As is often the case, this meant examining archives of early Hollywood films overseas, where reels were frequently neglected. The original soundtrack was recovered intact, but seven minutes, spread out over several scenes, remain either compromised or lost.
According to an introduction in the print shown on Turner Classic Movies, the UCLA Film and Television Archive and Columbia Pictures have restored as much as possible, and have used still photos to fill out the missing scenes. Subsequent releases of Lost Horizon on both video and DVD present a restored version that is close as possible to the original theatrical release. All 132 minutes of the original soundtrack have been recovered, whereas only 125 minutes of film footage was located. Some of the restored footage is faded and fuzzy in appearance due to the deteriorated condition of certain sections of the recovered film. As to the seven minutes of film footage still missing, a combination of publicity photos of the actors in costume (taken during filming) and still frames copied from elsewhere in the film is shown while the soundtrack plays. The introduction to the restored version proclaims "[their] search for the missing footage goes on".
The movie is notable for the visible breath of the actors in the scenes inside the frigid, crashed aircraft and on the frozen trek to Shangri-La. These sequences were some of the first to be filmed inside the Los Angeles Ice and Cold Storage Warehouse, at a temperature between 20-24 degrees Fahrenheit.