Following a stint in the armed forces after high school, Lye attended the University of Toronto, where he earned a Bachelor of Arts degree, and then enrolled in Lorne Greene's Academy of Radio Arts. In 1948, he moved to Ottawa to join Frank Ryan's CFRA team.

As a radio announcer, Lye worked with the station's popular groups and was also in demand as an emcee at their many live appearances. After heading back to Toronto to work for a short time at CKEY, he returned to Ottawa and CFRA with his alter ego, Abercrombie. Lye became one of radio's top personalities before turning to the new medium of television in 1958. His first job, as a co-host on the talk show Contact, lasted three years.

In 1961, CJOH-TV went on the air with Lye as a freelance Writer and performer. Meanwhile, local entertainer Bill Luxton was busy with several shows, including a morning magazine. Forming what would become a long-lasting partnership, Lye soon began creating comic characters for Bill to interview on his morning show.

When Puppeteer John Conway decided to give up hosting the CJOH kids show Cartoonerville in 1966, the station's programmers asked Lye and Luxton to team up and take over. Uncle Willy & Floyd was born. Over the years, such personalities as Klea Scott, Bruno Gerussi and Margaret Trudeau would drop by for surprise guest appearances. In addition to Luxton, Lye worked with Don Harron, Ruth Buzzi and Orson Bean, and worked for the CBC, CTV and Global television networks. Uncle Willy & Floyd ran for 22 years in syndication across Canada. Among his many accomplishments, Lye appeared in a number of stage shows and was a major contributor to Rich Little's career.

Lye eventually gained international acclaim appearing on You Can't Do That on Television. The Canadian children's show, which was wildly popular in the United States and a staple on Nickelodeon's programming line-up, enjoyed a 10-season run from 1979 to 1990. Lye played all the adult male characters on the show, including Ross Ewich (the show's stage director), Lance Prevert (a slovenly, drunken, corrupt Canadian senator and father), Barth (the owner and chef of the worst burger joint ever), Blip (a greedy arcade owner), Snake Eyes (a bus driver who always drives his bus into a wall or off a cliff), Mr. Schidtler (a pompous and sarcastic school Teacher with a vague resemblance to Adolf Hitler), Nasti the dungeon master (a German jailer who is often seen chaining people in a dungeon), El Capitano (a Latin American military officer in command of a firing squad), and a Doctor (later, dentist), who has the same glasses, mustache, cigar, and wry sense of humor as Groucho Marx.

In animation, he guest-starred on an episode of The Raccoons and appeared as Professor Coldheart in the first two television specials based on the Care Bears franchise, The Care Bears in the Land Without Feelings and The Care Bears Battle the Freeze Machine. In 1987, he became the voice of Quellor on The Adventures of Teddy Ruxpin. Lye also did several different voices on Dennis the Menace for DiC Entertainment as well as supplying voices on three TV specials for Atkinson Film-Arts The Legend of Hiawatha, Babar and Father Christmas and Rumpelstiltskin.

In 2003, Lye and Luxton were honored with lifetime achievement awards from the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA), for their work on Willy & Floyd. Lye continued to work as an active member of the Juvenile Diabetes Research Foundation and was writing a book of his memoirs at the time of his death.

Lye is prominently featured in the 2004 independent documentary, You Can't Do That on Film, directed by David Dillehunt.

Lye died in Ottawa, Ontario, after a decade of diabetes on July 21, 2009. Lye had previously suffered a mild heart attack in 2002, and suffered from diabetes in his later years. He was survived by his wife Jonni, and his three children: Brett, Daralyn and Emily.