Nathan Lyon moved from Young to Canberra as a teenager where he went on to play for ACT Cricket's under-17s and under-19s representative teams. Lyon played for Western Districts and University of Canberra Cricket Club in ACT Grade cricket and debuted for the ACT Comets in 2008 in the Cricket Australia Cup against the South Australian Second XI where he claimed a wicket on day one. During his time with Comets Lyon was mentored by captain, and later captain-coach, Mark Higgs, who helped him in his spin bowling, getting his bowling action right as well as the tactical side including what lines to bowl and fields to set. After Lyon left the Comets he continued to keep in contact with Higgs in regards to the game.

In 2010 Nathan Lyon moved to Adelaide and worked as a member of the ground staff team at the Adelaide Oval. He played for the Prospect Cricket Club in the South Australian Grade Cricket League while continuing playing for the Comets in the Futures League. After Lyon's performance in the 2010 Futures League Twenty20 in December for the Comets in Melbourne which South Australia's Twenty20 coach Darren Berry witnessed he was selected to play for the Southern Redbacks in the KFC Twenty20 Big Bash.

In 2010–11 KFC Twenty20 Big Bash Lyon was the leading wicket-taker where the Redbacks went on to win the competition. Lyon went on to play for South Australia in the Sheffield Shield and the Australian domestic limited-overs competition. In the same year he was selected to represent Australia A in Zimbabwe where he took 11 wickets in the tri-series to be named man of the series. Nathan Lyon has signed to play in the inaugural season of the Big Bash League for the Adelaide Strikers.

In 2013, Lyon returned to represent his home state New South Wales and Sydney Sixers.

In May 2017 it was announced that Worcestershire had signed Lyon as a replacement for compatriot John Hastings, who was competing in the ICC Champions Trophy.

On 15 November 2017, during the final moments of the Sheffield Shield match against Queensland at the Allan Border Field, Lyon was involved in a bizarre incident, bu