Naughton was born in West Hartford, Connecticut, United States, the son of Rosemary (née Walsh) and Joseph Naughton, both of whom were teachers. He is the younger of two boys; his older brother is theater and film actor James Naughton. His family is Irish American. Naughton attended the University of Pennsylvania and the London Academy of Music and Dramatic Art. Naughton was an Assistant Stage Manager and Understudy for the Broadway production of Hugh Leonard's Da.
Naughton first became widely known as a result of his four-year stint (1977–1981) singing and dancing in television commercials and personal appearances to promote Dr Pepper. He starred in the sitcom Makin' It, and hit the Billboard Top Ten in 1979 with the sitcom's theme song, also titled "Makin' It." A US million selling disc, the track also peaked at No. 44 in the UK Singles Chart.
He starred in the Disney comedy Midnight Madness (1980) followed by his lead role in the Academy Award-winning horror film An American Werewolf in London (1981) directed by John Landis. He also appeared in the television series My Sister Sam and also in episodes of MacGyver, Melrose Place, Murder, She Wrote, JAG and Seinfeld.

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