Lawford was born in Santa Monica, California at Saint John's Health Center. He is the eldest child and only son of actor Peter Lawford (1923–1984) and socialite Patricia "Pat" Kennedy Lawford (1924–2006). His three younger sisters are Sydney McKelvy (born 1956), Victoria Pender (born 1958), and Robin Lawford (born 1961). Lawford is a nephew of President John F. Kennedy and former cousin-in-law of actor/politician Arnold Schwarzenegger (appearing in two of his films, including Terminator 3). Peter and Patricia Lawford divorced in 1966 after which Patricia raised the children in New York City.

Lawford told Australian interviewers that he has been trying to make a film about the 1962 Cuban missile crisis from Cuba's perspective but that he has been stymied by the U.S. embargo.

Lawford began taking drugs while attending the Middlesex School. By the late 1970s, he had developed a serious drug abuse Problem. He briefly attended Fordham Law School but dropped out after several months due to his dependency on heroin (he later contracted Hepatitis C due to his drug use). In 1980, he was arrested in Aspen, Colorado for impersonating a Doctor in order to get prescription medication. The charges were later dropped when Lawford completed his probation.

Before his parents' divorce, Lawford attended St. Martin of Tours Elementary School in Los Angeles. Upon moving to New York City with his mother, he attended the Middlesex School in Concord, Massachusetts. He later earned a Bachelor of Arts from Tufts University in 1977. In 1983, he earned a J.D. from Boston College Law School, and a master's certificate in Clinical Psychology from Harvard University where he gained an academic appointment as a Lecturer in Psychiatry.

In November 1984, Lawford married Jeannie Olsson, a sales advertising assistant for New York magazine. They have three children: David Christopher Lawford, Savannah Rose Lawford, and Matthew Kennedy Lawford. They divorced in 2000.

In 1988, Lawford decided to pursue a career in acting. He spent over fifteen years in the film and television Business as an actor, Lawyer, executive, and Producer. He began his career in Universal Studios' Independent Film Acquisitions where he was responsible for the acquisition of American Graffiti, one of the highest-grossing films of the early 1970s. As an independent Producer Lawford arranged financing for and produced films including Kiss Me Guido & Drunks; both films were selections in the Sundance Film Festival.

Lawford told the Australian newspaper that he sat next to Cuban leader Fidel Castro in Havana during a 2001 screening of Thirteen Days, a film about the missile crisis. "It was incredible. I went there and sat next to the guy my uncles were trying to kill. But President Castro believes if President Kennedy had lived, the embargo would have been lifted and they would have normalized relations." In a separate interview with ABC, Lawford said Castro "got up at the end of the film and he said, 'You've made a great film, but you've ignored Cuba, now you have to make a film of what was happening here in Cuba during those thirteen days." Lawford said that he had returned to Cuba six times in an effort to do just that "but as you know we have an embargo against Cuba, which is one of the greatest foreign policy tragedies in the history of the United States."

In September 2005, Harper Collins Publishers released Lawford's memoir Symptoms of Withdrawal: A Memoir of Snapshots and Redemption (William Morrow 2005, ISBN 0-06-073248-2), which immediately became a New York Times Bestseller. In 2009, he released Moments of Clarity: Voices from the Front Lines of Addiction and Recovery, a series of essays by public figures, athletes and entertainers who have struggled with addiction to drugs and alcohol. Almost every interviewee sought help from a twelve-step program such as Alcoholics Anonymous, Narcotics Anonymous or another spiritually based means of support for recovery. In his own life, Lawford battled a drug and alcohol addiction for much of his early life, and has been in recovery for more than 24 years.

Lawford supports Women in Recovery, Inc., a non-profit organization offering a live-in, 12-step program of rehabilitation for women in need, based in Venice, California. This charity, which was founded by a longtime resident of Venice, Sister Ada Geraghty, annually honors those who have made a difference in helping women overcome substance abuse problems. Lawford was the 2006 honoree for Women in Recovery at their Gala; past honorees have included Jamie Lee Curtis, Angela Lansbury, and Anthony Hopkins.

Lawford was raised in the Roman Catholic faith. In a 2009 interview, Lawford admitted that he left the church in 1968 stating:

In March 2010, Lawford sold at auction a 1965 Picasso painting, Femme au Grand Chapeau. Buste. The painting was estimated to sell at Sotheby's for between $8 million to $12 million and ended up bringing $8.2 million, or $9.3 million with Sotheby's buyer's commission.

In May 2014, Lawford married Mercedes Miller, a yoga Teacher, in Maui, Hawaii.