She attended Syracuse University on a drama scholarship but did not graduate, and moved to New York City to study at the American Academy of Dramatic Arts.

[4] Loudon made her stage debut in 1962 in The World of Jules Feiffer, a play with incidental music by Stephen Sondheim, under the direction of Mike Nichols.

Of her portrayal, Clive Barnes wrote, "As the wicked Miss Hannigan, Dorothy Loudon, eyes bulging with envy, face sagging with hatred, is deliciously and deliriously horrid.

In 1979, Michael Bennett cast Loudon as Bea Asher, a widow who becomes romantically involved with a mail carrier she meets at the local dance hall, in Ballroom.

During her rendition of George Gershwin's "Vodka" at the 1983 Tony Awards ceremony while resplendent in a blue sequined gown, she ad-libbed "I'm too good for this room.

[2] She was cast as Carlotta Vance in the Lincoln Center Theater production of Dinner at Eight but was replaced by Marian Seldes in November 2002 when Loudon left the play because of illness.

In 1979, Loudon starred in the television series Dorothy, in which she portrayed a former showgirl teaching music and drama at a boarding school for girls.

She appeared in only two films, playing a photography agent in Garbo Talks (1984) and as Southern eccentric Serena Dawes in Midnight in the Garden of Good and Evil (1997).