Dropping out of school at the age of fifteen to join a juvenile vaudeville act, Lahr worked his way up to top billing on the Columbia Burlesque Circuit. In 1927 he moved to Broadway plays as a comic actor, performing classic routines such as Woodman, Spare That Tree! Among Lahr's theatrical hits in the 1930s included co-starring with Ethel Merman in "DuBarry Was a Lady".

Aside from The Wizard of Oz, his movie career never caught on, possibly because his gestures and reactions were too broad for that intimate medium. His later life was troubled, although he made the transition to straight theatre, particularly in a much-praised version of Waiting for Godot, in which he played Estragon to Tom Ewell's Vladimir. Lahr thought of himself as the "top banana" in the production, telling Ewell "not to crowd him" (when he learned of this, Beckett complained that the play was being taken away from his "major character", Vladimir).

He also performed in television commercials, including a memorable series for Lay's potato chips during its long-running "Betcha can't eat just one" campaign. Among other Broadway roles, Lahr played Queen Victoria in a sketch from the musical "Two on the Aisle." He also performed as Moonface Martin in a television version of "Anything Goes" with Ethel Merman reprising her role as Reno Sweeney and Frank Sinatra as Billy Crocker.

The more soft-spoken aspect of his broad-ranging vocal characterization of the Cowardly Lion was a strong influence on the voice used for the Hanna-Barbera cartoon character Snagglepuss.

Lahr died in 1967 in the middle of filming The Night They Raided Minksy's, forcing producers to use a double in several scenes. Fittingly, this last role was as a burlesque comic.