Hendra has been married twice. His first marriage, to Judith H. Christmas in 1964, produced two daughters and ended in an acrimonious divorce in 1985. He and his second wife, Carla, live in New York City with their three children.

In 1972, Hendra co-created National Lampoon's first album Radio Dinner, with Michael O'Donoghue, on which Hendra performed a parody of John Lennon titled Magical Misery Tour. In 1973, Hendra produced, directed and co-wrote (with Sean Kelly), the Lampoon's off-Broadway revue Lemmings in which Hendra cast John Belushi, Chevy Chase and Christopher Guest in their first starring roles. Hendra continued as an Editor of the Lampoon until 1975 when he became co-editor-in-chief with Kelly until 1978.

After leaving the Lampoon in 1978, Hendra began working as a freelance Editor, Writer and actor. During the New York newspaper strike of 1978, he edited and co-created the parody Not the New York Times with Rusty Unger, Christopher Cerf, and George Plimpton, and published by Larry Durocher and Josh Feigenbaum. In 1979 he co-edited (with Cerf and actor Peter Elbling) "The 80s - A Look Back" In 1980 he packaged and edited "The Sayings of Ayatollah Khomeini" aka "The Little Green Book of Ayatollah Khomeini" a collection of the Ayatollah's actual teachings with an introduction by Clive Irving which was regularly featured on Johnny Carson's Tonight Show. In 1982 he was editor-in-chief of Off the Wall Street Journal and Off the Wall Street Journal II which between them sold almost a million copies and featured such contributors as Kurt Andersen. Other parodies Hendra created and edited included The Irrational Inquirer, Playboy: the Parody and Not the Bible (1983). Hendra was featured on the cover of Newsweek (25 April 1983) with Sean Kelly and Alfred Gingold. Hendra was a Writer for and became editor-in-chief of Spy Magazine from 1993–94.

In 1984, Hendra co-created, co-wrote, and co-produced the British television satirical show Spitting Image for which he, Jon Blair, and John Lloyd were nominated for a British Academy Award in 1985. He was ousted from the production after the first six shows, being replaced by Rob Grant and Doug Naylor. He played Ian Faith in This Is Spinal Tap.

In the mid-80s Hendra decided to devote himself exclusively to writing and in 1987 published "Going Too Far" a history of 'sick' 'black' 'anti-establishment' American satire (aka "Boomer Humor") from the 1950s to the 1980s, which featured interviews of Boomer Humor's chief practitioners from Mort Sahl to Jules Feiffer to Second City, Nichols and May, Bob Newhart, Dick Gregory, George Carlin and many others including National Lampoon.

He appeared in several other films and television programs, including Miami Vice, The Cosby Mysteries, and Law & Order: Criminal Intent. In 1997, Hendra and Director Ron Shelton wrote The Great White Hype, a satire of racism in boxing, starring Samuel L. Jackson, Damon Wayans, Jamie Foxx, Jeff Goldblum, and Peter Berg. He co-conceived and wrote the English dubs of three of the films created by Belgian Animator Picha, including The Missing Link (1980), The Big Bang (1987), and Snow White: The Sequel (2007).

In 2004, at the time that Father Joe was achieving best-seller status, Jessica Hendra, the younger of Hendra's two daughters from his first marriage, submitted an op-ed piece to The New York Times in which she asserted that her Father failed to include in his narrative of "deliverance through faith and atonement for his failings" that he had sexually abused her as a young child. The newspaper declined to publish the piece, but did assign a reporter, N. R. Kleinfield, to investigate her charges. On 1 July 2004, The Times published Kleinfield's story, including details of the alleged acts of molestation and interviews with two of Jessica's therapists, three friends, her mother, and her husband. All said that Jessica told them at different junctures of being molested—in her mother's case, when she was 12. A former boyfriend told Kleinfield, however, that Jessica never spoke of it during their years together, and that she was "very unstable emotionally"—adding, "I can't believe it happened." Hendra responded, "I can only just categorically deny this. It's not a new allegation. It's simply not true, I'm afraid."

"I don't mean in any way to diminish the gravity of Jessica Hendra's charges," Okrent continued. "I can't imagine an accusation more serious, a transgression more detestable. If her story is true, Tony Hendra deserves punishment far greater than humiliation in the pages of The Times. As an Editor, the verities of the profession might have led me to publish this article. But as a reader, I wish The Times hadn't." In 2005, Jessica Hendra wrote a memoir with USA Today Journalist Blake Morrison, How to Cook Your Daughter, in which she repeated her accusations.