Lofgren was born in Chicago, Illinois on June 21, 1951 to Swedish/Italian parents. Moving to the Washington, D.C., area as a teenager, Lofgren's first instrument was the accordion. He was also a competitive gymnast in high school, a skill that popped up later in his career.

Lofgren joined Neil Young's band at age 17, playing piano on the album After the Gold Rush. Lofgren would maintain a close musical relationship with Young, appearing on his Tonight's the Night album and tour among others. He was also briefly a member of Crazy Horse, appearing on their 1971 LP and contributing songs to their catalogue.

He is also known as a member of Bruce Springsteens E Street Band since 1984.