Lyon attended school in Dublin, Ireland.
Lyon emigrated to America in 1765. In 1774 he purchased lands at Wallingford, Vermont and resided there for three years. A born forester and pioneer, possessing natural qualities of leadership, he was soon prominent in the turbulent border country of Lake Champlain. He took part in the incessant Hampshire Grants dispute and the early organization for revolutionary action, followed Ethan Allen at Ticonderoga, and served as adjutant of a Vermont regiment under Montgomery in the early stages of the Canadian campaign.
In 1776 he was again in service as a lieutenant near the Canadian border, when the indiscipline of his command, characteristic of the Revolutionary army, led to his being cashiered by General Gates. That this action was probably unjustified was evidenced by his reinstatement and distinguished service during St. Clair's retirement in 1777 and the subsequent operations around Saratoga. He resigned from the army after Burgoyne's surrender and thenceforth took a prominent place in the civil and military affairs of Vermont, being promoted to the rank of colonel in the militia, serving as secretary to the governor and Council, and representing Arlington in the legislature.
He was probably in touch with the leaders of the Haldimand intrigue although not a principal in that affair. His share in the operations of the council of public safety and those of the court of confiscation is not clear. In 1785 he was impeached for failure to deliver the records of the latter body, although proceedings were soon dropped, apparently through fear of unpleasant disclosures.
In 1783 he moved to Fair Haven and became the leading business man of the locality, opening ironworks, manufacturing paper from basswood, establishing a printing-press, and getting out ship-timber for the Lake Champlain-Montreal trade. When the great party struggle of the next decade began he was in an established position. "I had wealth, high political standing, an established character and powerful connections attached to me by long riveted confidence, as well as matrimonial affinity, to throw in the scale". This statement is important in view of Federalist slanders creating the impression that Lyon was an ignorant, uncouth demagogue of the frontier. Following the admission of Vermont to the Union, Lyon was an unsuccessful candidate for both the federal Senate and House, but he was elected to the latter body in 1797.
New England had as yet furnished few Republicans to Congress and the Vermont member was immediately an object of unfriendly curiosity, heightened by his vigorous objections to the current practice of waiting on the president with a reply to the annual message. He was mercilessly lampooned by Cobbett and the whole Federalist press was soon in action. On January 30, 1798, he spat in the face of Roger Griswold when the latter made an insulting reference to his military record, and, on February 15, Griswold assaulted him with a cane. These, the first and probably the most famous personal encounters on the floor of the House, with the subsequent investigations, serve to enliven the dreary pages of the Annals for several weeks.
Lyon escaped expulsion but endured an incredible amount of scurrility and abuse, the whole affair showing in unequaled fashion the intense bitterness of party spirit at the time. He was now a marked man and the newspapers were carefully watched for material that would render him liable to prosecution under the Sedition Act, which he had manfully opposed on the floor. Actionable matter was discovered in a letter of his, published in the unfriendly Vermont Journal on July 31, 1798. Prosecution followed and on October 9, 1798, Lyon was sentenced to serve four months in jail at Vergennes and to pay a fine of one thousand dollars. This stupid prosecution, of doubtful legality, combined with grave suspicion of jury-packing, had the natural result. Lyon was reelected by an overwhelming majority and on release enjoyed a triumphal progress to Philadelphia.
In 1840 a bill was passed, refunding the fine to his heirs. During his second term he continued a vigorous opposition to the Adams administration, resisted the tampering of agents of Burr during the presidential contest in the House, and, on the withdrawal of his colleague Lewis R. Morris, cast the decisive vote of Vermont for the election of Thomas Jefferson. Then followed his famous letter to "Citizen John Adams" which is a valuable index to the sentiment of the day, although history has revised the contemporary estimates of both men.
Lyon had already decided to move West and after a preliminary journey went with a considerable colony of relatives and associates to Eddyville, Kentucky, in 1801. There his career was in many respects a repetition of that in Vermont. Eddyville became a prosperous business center and Lyon was soon a political power in Kentucky, serving a legislative term in 1802 and being elected for a further period of congressional service extending from 1803 to 1811. These years served to bring out Lyon's best qualities as a vigorous speaker and debater, who displayed elements of statesmanship sufficient to refute the earlier slanders. In fact, his repeated clashes with John Randolph on the Yazoo question and his vigorous denunciation of the Embargo and the foreign policies of President Madison brought him into friendly relations with some of his old enemies. He became a friend and correspondent of Josiah Quincy, and took advantage of the fact to urge the Massachusetts leader not to endanger the Union in the critical days of 1814. On the election to the 12th Congress he was defeated.
His business suffered during the war and on January 16, 1817, he wrote: "I am reduced to dependence on my children". He was always on good terms with President Monroe, who soon found a federal office for him, and in 1820 Lyon went to Arkansas as factor to the Cherokee Nation. He was soon in politics, being defeated as congressional delegate in the first territorial election but succeeding in the second; he died at Spadra Bluff, Arkansas, before taking his seat.
In his seventy-third year he had performed a three-thousand-mile journey on a flatboat to New Orleans and return. A vigorous blast of his against the extravagance and degeneracy of the times in general and of Washington society in particular was posthumously published in Niles' Weekly Register, December 7, 1822; this was a typical utterance of the Republican stalwart of 1798. In many ways his career was symbolic of national progress and "this national growth which I almost idolize, " as he once put it in the course of debate. He was typical both of the northern frontiersmen and "the men of the Western waters, " but with a shrewd business ability which, uninterrupted by politics, might well have made him an early American merchant prince. The loss of his autobiography, said to have been destroyed by mice in a Kentucky garret, undoubtedly deprived the country of an entertaining and valuable historical document.
Lyon was a member of the Republican Party. In his speeches in Congress, he denounced the tyranny of the House rules, the speaker's appointment of committees, the centralizing tendencies to which the Jeffersonians had resorted, the arbitrary government of the western territories, the growth of executive prerogative, and the congressional caucus. He argued for the protection of infant industries with a vigor worthy of Henry Clay, even suggesting the possibility of using slave labor in the industrial development of the South and West. He vigorously opposed to the policies leading to the War of 1812.
About 1771 Lyon married a Miss Hosford of Litchfield, niece of Ethan Allen. His first wife died in 1782 and a year later he married Mrs. Beulah (Chittenden) Galusha, a daughter of Governor Thomas Chittenden.