Lithgow was born in Rochester, New York. His mother, Sarah Jane (née Price), was a retired actress. His father, Arthur Washington Lithgow III, was a theatrical producer and director who ran the McCarter Theatre in Princeton, New Jersey. Because of his father's job, the family moved frequently during Lithgow's childhood; he spent his teenage years in Akron (living at Stan Hywet Hall) and Lakewood, Ohio.
Lithgow attended Harvard College, and graduated with an A.B. magna cum laude in 1967, in history and literature. He lived in Adams House as an undergraduate. Lithgow later served on Harvard's Board of Overseers. Lithgow credits a performance at Harvard of Gilbert and Sullivan's Utopia Limited with helping him decide to become an actor. After graduation, Lithgow won a Fulbright Scholarship to study at the London Academy of Music and Dramatic Art. Also, after graduation, he served as the Director of the Arts and Literature Department at WBAI, the Pacifica radio station in New York City.
Lithgow is probably most widely known for his starring role as Dick Solomon in the 1996–2001 NBC sitcom 3rd Rock from the Sun. He was nominated for a Primetime Emmy Award in the category Outstanding Lead Actor in a Comedy Series in each of the program's six seasons and won three times, in 1996, 1997, and 1999.
In 1983 and 1984, Lithgow was nominated for the Academy Award for Best Supporting Actor for his performances as Roberta Muldoon in The World According to Garp and as Sam Burns in Terms of Endearment. Both films were screen adaptations of popular novels. Lithgow originated the character of Dr. Emilio Lizardo/Lord John Whorfin, an Italian physicist inhabited by an evil alien, which he played in the 1984 cult film The Adventures of Buckaroo Banzai Across the 8th Dimension. In 1984, Lithgow also played a pastor who condemns dancing in Footloose.
In 1983, Lithgow appeared in a remake of the classic Twilight Zone episode "Nightmare at 20,000 Feet" in Twilight Zone: The Movie as the paranoid passenger made famous on the television show by William Shatner. In an interview with Bill Moyers, Lithgow reveals this role as his favorite of his film career. In 1991, he starred in the movie Ricochet opposite Denzel Washington as Earl Talbot Blake, a criminal seeking revenge against the policeman who sent him to prison. Also in 1991, he played missionary Leslie Huben in the film adaptation of Peter Matthiessen's novel At Play in the Fields of the Lord. In 1992, he starred as a man with multiple personality disorder in Brian De Palma's film Raising Cain and the narrator in Doctor Seuss Video Classics: Yertle the Turtle and Other Stories, and in 1993, starred as the villainous Eric Qualen in the Sylvester Stallone movie Cliffhanger.
In 1987, Lithgow starred in the Bigfoot-themed family comedy Harry and the Hendersons. In 2002, he narrated Life's Greatest Miracle, a documentary about human embryonic development, while in 2004, he portrayed the moralistic, rigid father of Alfred Kinsey in that year's biopic Kinsey. In 2006, Lithgow had a small role in the Academy Award-winning film Dreamgirls, as Jerry Harris, a film producer offering Deena Jones (Beyoncé Knowles) a film role. He starred in a lead role in the science fiction film Rise of the Planet of the Apes.
As a voice actor, Lithgow voiced the evil Lord Farquaad in the Shrek movie franchise who also appears in Shrek, Shrek in the Swamp Karaoke Dance Party, Shrek 4-D which was originally Shrek 3-D and used as an amusement park attraction and Shrek the Third. He also was in Confessions of a Shopaholic as Edgar West.