Instead of remaining with Young, Lofgren used the resulting exposure to get Grin a record contract. The group recorded three albums from 1971 to 1972, garnering critical praise but no sales. A move to A&M produced the lackluster Gone Crazy, which proved to be Grin's swan song; Lofgren accepted an invitation from Young to tour in 1973 and play on his Tonight's the Night album. Grin officially disbanded in mid-1974 owing to a lack of success and financial problems. Lofgren was rumored to be under consideration as a replacement for Mick Taylor in the Rolling Stones; instead, he signed to A&M as a solo artist. His first two solo efforts, Nils Lofgren and Cry Tough, were all-around successes, and Lofgren made a name for himself on supporting tours through stunts such as performing while jumping on a trampoline.

Subsequent releases failed to develop Lofgren's sound any further, and he became more viable as a sideman than a solo performer. Following 1983's Trans tour with Young, Lofgren joined Bruce Springsteen's E Street Band, replacing Little Stevie Van Zandt in 1984, remaining there until the unit was dissolved in 1991. Lofgren returned to solo recording that year with Silver Lining, which featured guest appearances from Springsteen and members of Ringo Starr's band. Acoustic Live followed in 1997. Lofgren resurfaced in 2002 with the Vision Music release Breakaway Angel, his first studio effort in six years (and also notable for his emphasis on classical harp in addition to guitar). Shine Silently, on the Spectrum label, arrived in 2004. A year later, Favorites 1990-2005, pulled mostly from Lofgren's 1991 and 1992 Rykodisc records, was released, followed by 2006's Sacred Weapon, which featured appearances from Willie Nelson, Graham Nash, and David Crosby. Lofgren's next album, 2008's The Loner: Nils Sings Neil, with Lofgren interpreting various Neil Young songs, was a wonderfully perfect idea, a way of closing the circle. Lofgren's first album of new material (he wrote 11 of the 12 tracks) in six years, Old School, appeared late in 2011, and featured guest appearances by Sam Moore, Paul Rodgers, and Lou Gramm.