Lopez was born in Washington, D.C. and is the son of U.S. Air Force pilot and Smithsonian Institution official Donald Lopez. He was educated at the University of Virginia, receiving a B.A. (Hons) in Religious Studies in 1974, an M.A. in Buddhist Studies in 1977, and his doctorate in Buddhist Studies in 1982. He is married to another prominent Religious Studies scholar, Tomoko Masuzawa.
Lopez is a Fellow of the American Academy of Arts and Sciences and has written and edited many books on various aspects of the religions of Asia. He specializes in late Indian Mahayana Buddhism and in Tibetan Buddhism and commands classical and colloquial Tibetan. In 2008 he gave a four talks on The Scientific Buddha: Past, Present, Future as part of a Dwight H. Terry Lectureship at Yale University. In 2012 he delivered the Edwin O. Reischauer Lectures at Harvard, The White Lama Ippolito.
He is a long-term associate of Yale professor of New Testament studies Dale Martin.