Ranaldo was born in Glen Cove, Long Island, studied art and graduated from Binghamton University. He has three sons, Cody, Sage and Frey, and is married to the experimental artist Leah Singer.
Ranaldo started his career in New York in several bands, and joined the electric guitar orchestra of Glenn Branca. In 1981, he and David Linton briefly joined the band Plus Instruments formed by Truus de Groot. With this line-up they recorded the album February - April 1981, released on the Dutch Kremlin label. After the release of the album, Ranaldo left the band and started Sonic Youth with Thurston Moore and Kim Gordon.
In 1987, Ranaldo released his first solo album, From Here to Infinity, compositions which ended in locked grooves. The second side of the album also featured an unplayable engraving by Savage Pencil.
Among Ranaldo's solo records are Dirty Windows, a collection of spoken texts with music, Amarillo Ramp (For Robert Smithson), pieces for the guitar, and Scriptures of the Golden Eternity. His books include several with art or photography by Leah Singer, including Drift, Bookstore, Road Movies, and Moroccan Journal: Jajouka excerpt (from a full-length book of writings on Moroccan travels and music). Ranaldo has also published Jrnls80s (published by Soft Skull Press), as well as a book of poems, Lengths & Breaths, with photography by Cynthia Connolly. His most recent book of poetry, Against Refusing, was published by Water Row Press in April 2010 with cover artwork by Leah Singer. His visual and sound works have been shown at galleries and museums in Paris, Toronto, New York, London, Sydney, Los Angeles, Vienna, and elsewhere.
After Sonic Youth went on hiatus in 2011, Ranaldo released Between the Times and the Tides in early 2012 on Matador Records. The record was the first under his own name to feature comparatively straightforward, vocal pop rock songs. Contributors to the record include Jim O'Rourke, Sonic Youth drummer Steve Shelley, former Sonic Youth drummer Bob Bert, Wilco's Nels Cline, Alan Licht, John Medeski, and bassist Irwin Menken.
In 2012, he performed a solo concert at La Maroquinerie, for which he was photographed by Jean-Pierre Domingue.
To tour for the album, Ranaldo organized The Dust as his formal group, featuring Licht, Shelley, and bassist Tim Lüntzel. In 2013, his follow-up album Last Night on Earth was released, credited to Lee Ranaldo and the Dust.