Lyon succeeded his father, becoming the 3rd Earl of Kinghorne in 1646. He also inherited enormous debts from his father, who had bankrupted himself funding the Covenanting Army. He spent much of the rest of his life successfully working to return the family to solvency. Lyon married Helen, daughter of the 1st Earl of Middleton at the Palace of Holyroodhouse in Edinburgh (1662).
In 1677, he was granted the title of Earl of Strathmore and Kinghorne, the title which survives in the family to this day. He undertook substantial improvements at Glamis Castle, remodelling the interior and adding the west wing and the Chapel.
He died at Castle Huntly and is buried at Glamis.