[1] Lightfoot cited his divorce for inspiring the lyrics,[2] which came to him as he was sitting in a vacant Toronto house one summer.

Lightfoot said in an interview that the difficulty with writing songs inspired by personal stories is that there is not always the emotional distance and clarity to make lyrical improvements such as the one his daughter suggested.

[4] The song was produced by Lenny Waronker and Joe Wissert at Sunwest Recording Studios in Los Angeles, California,[5] with strings arranged by Nick DeCaro.

In 1987, Lightfoot filed a lawsuit against Michael Masser, the composer of Whitney Houston's hit "The Greatest Love of All", alleging plagiarism of 24 bars of "If You Could Read My Mind"; the transitional section that begins "I decided long ago never to walk in anyone's shadow" of the Masser song has the same melody as "I never thought I could act this way and I got to say that I just don't get it; I don't know where we went wrong but the feeling's gone and I just can't get it back" of Lightfoot's song.

House music collective Stars on 54—consisting of Amber, Jocelyn Enriquez, and Ultra Naté—recorded a version of the song for the 1998 film 54, reaching No.

Australian music channel Max included this version of "If You Could Read My Mind" in its list of the "1000 Greatest Songs of All Time" in 2012.

(...) It featured Ultra Nate (to date, our favourite female singer), as well as Amber and Jocelyn Enriquez.

In the end, the film company Miramax re-shot the conclusion of the movie and had the group perform the track.

Can't Stop the Pop called "If You Could Read My Mind" "one of the most mind-bogglingly brilliant cover versions of the ‘90s", adding that it "remains a deeply fabulous single" and "a proudly ‘90s homage to disco that is as uplifting and joyous as there could be – and can now be rightly enjoyed as a triumphant celebration of everything that 54 represents.

Amber and Ultra Naté perform in a room where every surface is covered in LED dancefloor tiles.

[52] Johnny Cash also recorded a version of the song that was released posthumously on his 2006 album American V: A Hundred Highways, which topped the Billboard 200.