"Panic in Detroit" was inspired by Iggy Pop's stories of the Detroit riots in 1967 and the rise of the White Panther Party, specifically their leader John Sinclair. Bowie compared the ideas of Sinclair to the rebel martyr Che Guevara for the narrator in "Panic in Detroit". The lyrics are very dark, featuring images of urban decay, violence, drugs, emotional isolation and suicide. Doggett finds a thematic link between the song and Bob Dylan's "All Along the Watchtower", which "used a similar three-chord riff to underpin its apocalypse". Musically, the song itself is built around a Bo Diddley beat; Pegg considers Ronson's guitar part very "bluesy".