The structure of the lyrics in this song is very similar to a Bob Dylan song of the same title. When this was realized, the song was then sent to Dylan, out of respect, asking whether he had a problem with it. The two men agreed to participate in the ownership of the song and share Stewart's royalties.
Stewart wrote the song with two of his band members: guitarist Jim Cregan and keyboardist Kevin Savigar. Stewart told Mojo magazine in 1995 that he considered "Forever Young" to be one of his favorite songs and the reason for writing it was, "I love 'Forever Young', because that was a real heartfelt song about my kids. I suddenly realized I'd missed a good five years of Sean and Kimberly's life because I was so busy touring all the time. With these kids now I don't make that mistake- I take them on tour with me, so I can watch them grow up. So that's another favorite. Unfortunately, it wasn't a big hit in England, but it's like a national anthem here (America)".
Stewart recorded a more mellow version of the song for his 1996 compilation albumIf We Fall in Love Tonight, and a version featuring just Stewart's voice with piano accompaniment can be found on the 2009 compilation album The Rod Stewart Sessions 1971-1998.