Dillon comes from an area steeped in Irish traditional music. Since she was a schoolgirl she has sung and performed. She learns local folk songs from teachers and workshops held in the town. She can also play the fiddle and whistles. At the age of 14 she wins the All-Ireland Singing Trophy at Fleadh Cheoil.
In 1991 Dillon forms a band called Óige (an Irish word meaning ‘youth’) with school friends Murrough and Ruadhrai O’Kane, bringing her take on Irish traditional songs to Ireland, Scotland and further afield. During this time she also performs with big names such as De Dannan and Phil Coulter. Óige records two albums with Dillon, a studio and a live album. Inspiration is recorded in 1992 to sell at concerts in Europe. The live album, simply called Live, is recorded at a concert in Glasgow on August 15, 1993.
Dillon leaves Óige in 1995 and joins the folk supergroup Equation, replacing Kate Rusby, and signs a record deal with Warner Music Group. She leaves Equation with original band member Sam Lakeman because of musical differences and together they immediately signed a separate deal with the same label as a duo named Polar Star. In 2001, she releases her first solo album, Cara Dillon, which features traditional songs and two original Dillon/Lakeman compositions. The album is an unexpected hit in the folk world, with Dillon receiving four nominations at the 2002 BBC Radio 2 Folk Awards. Lakeman and Dillon marry in December 2002.
Dillon’s second album, Sweet Liberty (2003), enters the Irish Albums Chart and UK Independent Albums Chart. In 2004, she receives the Meteor Irish Music Award for Best Irish Female. Her third album, After the Morning, is released in 2006. The album’s opening track “Never in a Million Years” gains BBC Radio 2 airplay, while other tracks feature the Czech Philharmonic orchestra and Paul Brady. Also in 2006, she sings at the opening of the Ryder Cup in Ireland.
In 2009, Dillon releases her fourth album, the award-winning Hill of Thieves. The record marks a return to Dillon’s traditional roots with a purer production and arrangement style. The titular track “Hill of Thieves,” a Dillon\Lakeman original, is voted by BBC listeners as one of the “Top 10” original songs to have come out of Northern Ireland. In 2012, she performs two concerts with the Ulster Orchestra.
Dillon’s fifth solo album, A Thousand Hearts, is released in 2014. Prior to the album’s release, she discovers that her music enjoys a dedicated following in China, where her first album is featured in English curriculums. She has since embarked on several popular Chinese tours. As of 2017, she continues to tour regularly and work with her husband, who backs her on piano and guitar. Her most recent release is the album, Wanderer (2017).
Dillon is the sister of fellow folk singer Mary Dillon, formerly of Déanta. Dillon and Lakeman live in Frome, Somerset, England with their three children, twin sons born in 2006 and a daughter born in 2010.