Larroquette was born in New Orleans, Louisiana, the son of Berthalla Oramous (née Helmstetter), a department store clerk who mostly sold children's clothes, and John Edgar Larroquette Jr., who was in the United States Navy. His grandfather, John Larroquette Sr., was born in France and emigrated to the United States in 1895.

His first acting role in Hollywood was providing the opening voiceover narration for The Texas Chain Saw Massacre (1974). Larroquette did this as a favor for the film's Director Tobe Hooper. His first series regular role was in the 1970s NBC program Black Sheep Squadron, where he portrayed a World War II United States Marine Corps fighter pilot named 2nd Lt. Bob Anderson. In a 1975 appearance on Sanford and Son, Larroquette plays Lamont's counterpart in a fictitious sitcom based on Fred and Lamont called "Steinberg and Son". During the filming of Stripes (1981), his nose was nearly cut off in an accident. He ran down a hall into a door that was supposed to open but did not, and his head went through the window in the door.

He moved to Hollywood in 1973 after working in radio as DJ during the early days of 'underground' radio, when each disc jockey was free to play what they wished. Larroquette met his wife Elizabeth Ann Cookson in 1974 while working in the play Enter Laughing. They were married July 4, 1975, as that was the only day they had off from rehearsals. They have three children, Lisa, Jonathan, and Ben. Their son Jonathan cohosts a comedy podcast called Uhh Yeah Dude.

Larroquette is best known for his role as Dan Fielding on Night Court; the character was initially rather conservative, but changed after the sitcom's creator Reinhold Weege came to learn more about Larroquette's sense of humor. The role won him Emmy Awards in 1985, 1986, 1987 and 1988. In 1989, he asked not to be considered for an Emmy Award. His four consecutive wins were, at the time, a record. Night Court ran on NBC from 1984 until 1992. Only Larroquette, Harry Anderson (as Judge Harry Stone), and Richard Moll (as bailiff Bull Shannon) appeared in every episode of the series. There was talk of spinning Dan Fielding off into his own show, but Larroquette said no to the idea.

His starring roles include the 1989 film Second Sight with Bronson Pinchot, and Madhouse with Kirstie Alley. Other films in which Larroquette had significant roles include: Blind Date, Stripes, Meatballs Part II, Summer Rental, Star Trek III: The Search for Spock, JFK and Richie Rich.

In 1998, he guest-starred on three episodes of the legal drama The Practice. His portrayal of Joey Heric, a wealthy, wisecracking, narcissistic psychopath with a habit of stabbing his gay lovers to death, won him his fifth Emmy Award. He reprised the role for one episode in 2002, for which he was once again Emmy Award-nominated. He also appeared in an episode of The West Wing as Lionel Tribbey, White House Counsel.

In 2003, Larroquette reprised his narration for the remake of The Texas Chainsaw Massacre. From 2004 to 2006, he played the title role in the McBride series of American television films. In 2007, he joined the cast of Boston Legal playing Carl Sack, a serious, ethical Lawyer (the polar opposite of his more famous Lawyer character, Dan Fielding). He also guest-starred in the drama House where he played a previously catatonic father awakened to try to save his son, and on Chuck as veteran spy Roan Montgomery. He has also done two voice roles in Phineas and Ferb as Bob Weber, as a lifeguard, as well as a man to marry his wife and the boy's aunt Tiana Weber in another episode. Most recently, Larroquette has been seen as a regular on The Librarians as Jenkins (actually the long-lived Camelot knight Sir Galahad), who provides support to the Librarians as a researcher and caretaker.

Larroquette battled alcoholism from the mid-1970s to the early 1980s. On The Tonight Show with Jay Leno on March 10, 2007, he joked, "I was known to have a cocktail or 60." He stopped drinking February 6, 1982.

Larroquette made his musical stage debut in the Los Angeles production of How the Grinch Stole Christmas! as Old Max in 2009. He made his Broadway debut in the 2011 revival of How to Succeed in Business Without Really Trying as J B. Biggley alongside Daniel Radcliffe. He won the Tony Award for Best Featured Actor in a Musical and the Drama Desk Award for Outstanding Featured Actor in a Musical for his performance in the show.