Naughton was born in Middletown, Connecticut, the son of Rosemary (née Walsh) and Joseph Naughton, both of whom were teachers. He is the elder brother of actor David Naughton. He graduated from Conard High School. Jim began singing during his years at Conard High School "with the high school band and at parties."
Naughton graduated from Brown University and Yale School of Drama. His acting career began when he appeared in a series of Broadway dramas and musicals. He has since become an accomplished actor in both starring and supporting film and television roles.
His largest fame and first love has been the legitimate theater. He won the Theatre World Award for his performance in Long Day's Journey into Night in 1971. He starred with Geneviève Bujold in Antigone, later made into a film in 1974. He starred in I Love My Wife in 1977 and in Whose Life is it Anyway? in 1980. He won his first Tony Award for Best Actor in a Musical in 1990 for City of Angels. In 1997, he won a second Tony Award with his portrayal of lawyer Billy Flynn in the musical Chicago. He played the role of Willy Brandt in Democracy on its U.S. première in 2004. His films include The Paper Chase and The First Wives Club. In 2006, he appeared in the movie The Devil Wears Prada. In 2006, he played Fuzzy Sedgwick in Factory Girl.

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