McCutcheon was born to Roman Catholic parents in Wausau, Wisconsin. He attended Saint James Grade School and graduated from Newman Catholic High School. He is a graduate of Saint John's University in Minnesota. While in his 20s, he travelled to Appalachia and learned from some of the legendary greats of traditional folk music, such as Roscoe Holcomb, I.D. Stamper, and Tommy Hunter. His vast repertoire also includes songs from contemporary writers like Si Kahn (e.g. "Gone Gonna Rise Again", "Rubber Blubber Whale") as well as a large body of his own music.
When McCutcheon became a father in the early 1980s he found most children's music "unmusical and condescending",[this quote needs a citation] and sought to change the situation by releasing a children's album, Howjadoo, in 1983. Originally, he had only intended to do one children's record, but the popularity of this first effort led to the production of several additional children's albums.
Much of his work, however, continues to focus on writing politically and socially conscious songs for adult audiences. One of his most successful songs, "Christmas in the Trenches" (from his 1984 album Winter Solstice), tells the story of the Christmas truce of 1914. In his performances, McCutcheon often introduces his music with a story, and has become known as a storyteller. He has made multiple appearances at the National Storytelling Festival in Jonesboro, Tennessee. He is married to children's author and storyteller, Carmen Agra Deedy.
McCutcheon's music has, since the 1990s, increasingly evolved into heartland rock-influenced ballads, while he still occasionally performs purer folk music, particularly when playing the dulcimer.
In 2011 McCutcheon portrayed IWW organizer and songwriter Joe Hill in Si Kahn's one-man play Joe Hill's Last Will, produced by Main Stage West in Sebastopol, California.