In high school Lurie played basketball and harmonica and jammed with Mississippi Fred McDowell and Canned Heat in 1968. He briefly played the harmonica in a band from Boston but soon switched to the guitar and eventually the saxophone.

Lurie has been painting since the 1970s. The majority of his early works are in watercolor and pencil but in the 2000s he began to work in oil. He has said of his art, "My paintings are a logical development from the ones that were taped to the refrigerator 50 years ago."

After high school Lurie hitch-hiked across the United States to Berkeley, California. He moved to New York City in 1974 then briefly visited London where he performed his first saxophone solo at the Acme Gallery.

In 1978 John formed The Lounge Lizards with his brother Evan Lurie; the Lurie brothers were the only constant members in the band through numerous lineup changes.

In the 1980s Lurie starred in the Jim Jarmusch films Stranger Than Paradise and Down by Law, and made cameos in the films Permanent Vacation and Downtown 81. He went on to act in other notable films including Paris, Texas and The Last Temptation of Christ. From 2001 to 2003 he starred in the HBO prison series Oz as inmate Greg Penders.

Parallel to the final version of the Lounge Lizards in the early 1990s, Lurie formed a smaller group: the ironically-named John Lurie National Orchestra. Personnel were Lurie on alto and Soprano saxes, Grant Calvin Weston on drum kit, and Billy Martin on congas, timbales, kalimba, and other small percussion. Unlike the tightly-arranged music of the Lounge Lizards this group's music was heavily improvised and compositions were credited to all three Musicians.

Lurie wrote, directed, and starred in the TV series Fishing with John in 1991 and 1992. The series later became a cult classic. It featured guests Tom Waits, Willem Dafoe, Matt Dillon, Jim Jarmusch, and Dennis Hopper. It aired on IFC and Bravo and has since been released on DVD by Criterion.

In 1993 Lurie composed the theme to Late Night with Conan O'Brien with Howard Shore. The theme was also used on The Tonight Show when O'Brien hosted. He formed his own record label in 1998, Strange & Beautiful Music, and released the Lounge Lizards album Queen of All Ears and a Fishing with John Soundtrack.

In 1999 Lurie released the album The Legendary Marvin Pontiac: Greatest Hits, a posthumous collection of the work of an African-Jewish musician named Marvin Pontiac, a fictional character he created. The album includes a biographical profile describing the hard life of the troubled genius and the cover shows a photograph purported to be one of the few ever taken of him. Lurie wrote the music and performed with John Medeski, Billy Martin, G. Calvin Weston, Marc Ribot, and Tony Scherr. The album received praise from David Bowie, Angelique Kidjo, Iggy Pop, Leonard Cohen, and others.

Lurie has experienced debilitating ill health since 2000, with initially baffling neurological symptoms. At one point he was told he had a year to live. The doctors he consulted in the first few years did not agree on a diagnosis but by 2006 eight separate doctors agreed that it was "chronic Lyme disease". Lurie has stated, "I have Advanced Lyme." Lurie initially became ill in 1994. The illness prevents him from acting or performing music so he spends his time painting.

His work has been exhibiting since July 2003 when two pieces were shown at the Nolan/Eckman Gallery in New York City. He had his first solo gallery exhibition at Anton Kern Gallery in May and June 2004 and has subsequently been exhibited at Galerie Daniel Blau in Munich, Galerie Lelong in Zürich, the Galerie Gabriel Rolt in Amsterdam, the Basel International Art Fair at Roebling Hall and the P.S.1 Contemporary Art Center in New York, the Montreal Museum of Fine Arts, the NEXT Art Fair in Chicago, the Mudam Luxembourg, the Watari Museum of Contemporary Art in Tokyo, Gallery Brown in Los Angeles, and the University of the Arts in Philadelphia.The Museum of Modern Art has acquired some of his work for their permanent collection.

Lurie has released two art books. Learn To Draw, a compilation of black and white drawings, was published by Walther Konig in June 2006. A Fine Example of Art includes over 80 reproductions of his work and was published by powerHouse Books in 2008.

In August 2010 Tad Friend wrote a piece in The New Yorker about Lurie disappearing from New York to avoid a man named John Perry, who, Friend said, was stalking Lurie. In the online literary magazine The Rumpus, Rick Moody noted that Friend's profile in The New Yorker, nominally about Lurie and his art, was two-thirds to three-quarters about Perry including a full page photo of Perry standing in front of one of his own paintings. Moody confirmed that Lurie was very ill with "chronic Lyme disease" and described Perry as a deceitful stalker capable of violence.

In May 2011 Perry undertook a public hunger strike to protest The New Yorker characterizing him as a stalker. Commenting about the protest Lurie said, "He's conducting a hunger strike a half block from my house to prove he's not a stalker." Lurie described the article as "wildly inaccurate," noting that its publication did not resolve anything and that "the situation continues."

Editor David Remnick said the piece in his magazine was "thoroughly reported and fact-checked," But in a letter to The New Yorker in August 2012 several interviewees claimed their words had been "twisted, misquoted, or ignored," and that "the man presented in the article [Lurie] is not the man that we know." In a February 2014 interview Lurie told the LA Times, "What one would hope is that the beauty in the music and in the paintings can somehow transcend and invalidate the kind of sickness that led to the article being written as it was and the kind of irresponsibility that allowed it to be published."

In 2017, after 17 years, John Lurie released his first music album, Marvin Pontiac The Asylum Tapes.