Cole was born in Buxton, Derbyshire and grew up in nearby Chapel en le Frith and went to New Mills Grammar School. After failing in law at University College London, he later attended (but did not graduate from) the University of Glasgow, where he studied philosophy and English and met the other members of The Commotions.
Their 1984 debut, Rattlesnakes, contained literary and pop culture references to such figures as Norman Mailer, Grace Kelly, Eva Marie Saint, Truman Capote and Joan Didion. The group produced two more albums, Easy Pieces and Mainstream, before disbanding in 1989, when Cole relocated to New York to record with various artists, including Fred Maher, Robert Quine and Matthew Sweet.
This solo setting produced two acclaimed albums, Lloyd Cole in 1990 and 1991's Don't Get Weird on Me Babe. The latter was recorded in two parts: one side continued the New York rock mastered on his first solo album, while the other side featured a session orchestra, much in the style of Burt Bacharach or Scott Walker. Although some reviewers have claimed Don't Get Weird on Me Babe (the title being a quote from the American neo-realist writer Raymond Carver) to be a creative peak, it produced significantly fewer record sales. While he remained with Polydor as his record label, the US distribution contract with Capitol Records ended. (US rights were immediately picked up by Rykodisc.)
Cole continued redefining his sound with Bad Vibes (1993), a collaboration with producer/remixer Adam Peters using a harder, grunge- and psychedelia-inspired sound. Love Story (1995) established stripped-down, largely acoustic sound landscapes with the help of Stephen Street (famous for his work with Blur and The Smiths) and former Commotions Neil Clark and Blair Cowan; the album produced a minor hit with the song "Like Lovers Do".
Following a massive purge of the artist roster that came with Universal Music's takeover of Polygram, he was dropped from the label with at least two full-length recordings locked in its vaults (later released in 2002 by One Little Indian).
In 2000, after years without a contract, Cole recorded a disc with the New York band Lloyd Cole and The Negatives, featuring Jill Sobule and Dave Derby of the Dambuilders.
He has since released solo albums on smaller independent labels. Sanctuary Records, the company responsible for the revival of Morrissey, released Music in a Foreign Language (2003) in the UK. Recorded largely by Cole himself (including tracks recorded directly into a Mac), the songs had a stark, folk-inspired singer-songwriter style. One Little Indian, home of BjÃ¶rk, released Music in a Foreign Language in the U.S.; they also collected a number of outtakes (recorded from 1996 to 2000) on 2002's Etc. and released an instrumental ambient electronica album, Plastic Wood, the same year.
Cole is constantly on tour, playing intimate club venues in a one-man acoustic setting. However, in 2004, to mark the 20th anniversary of the release of Rattlesnakes, Lloyd Cole and the Commotions reformed to perform a one-off, sell-out tour in the U.K. and Ireland.
In 2006, Cole released another solo album, Antidepressant, which featured Dave Derby as well as the guitar of former Commotion Neil Clark on some tracks. 
Cole currently lives in Easthampton, Massachusetts with his wife and two sons. He plays Belladrum Tartan Heart Festival, Inverness-shire, in August 2007