Shaffer began his musical career in 1972 as the musical director for a Toronto area production of Godspell. He went on to play piano for a Broadway show called The Magic Show in 1974, then became the musical director for NBC's popular Saturday Night Live television program from 1975 to 1980. SNL gave Shaffer the opportunity to stretch his comedy wings as well, when he eventually started appearing in sketches with the other comedians.
Shaffer occasionally teamed up with the Not Ready for Prime-Time Players off of the show as well, including work on Gilda Radner's highly successful Broadway show, and a time spent as the musical director for John Belushi and Dan Aykroyd, whenever they recorded or performed as The Blues Brothers.
Shaffer has appeared in a number of motion pictures over the years, including a major role in Rob Reiner's This is Spinal Tap, Blues Brothers 2000, a scene with Miles Davis in the Bill Murray film Scrooged and as a passenger in John Travolta's taxicab in Look Who's Talking Too. In addition, Shaffer lent his voice to Disney's animated feature and television series, Hercules.
Shaffer has released two solo albums, 1989's Grammy nominated Coast to Coast, and The World's Most Dangerous Party in 1993. Shaffer has also recorded with a wide range of artists, including Grand Funk Railroad, Diana Ross, B.B. King, Cyndi Lauper, Carl Perkins, Yoko Ono, Blues Traveler, Cher, and Robert Plant.
Shaffer has served as musical director and producer for the Rock and Roll Hall of Fame induction ceremony since its inception in 1986. He has also served as musical director for two of David Letterman's variety shows: as leader of "The World's Most Dangerous Band" for Late Night with David Letterman (1982-1993) on NBC, and as leader of the CBS Orchestra for The Late Show with David Letterman (1993-present) on CBS, for which Shaffer also composed the theme song.
In 2002, a street which surrounds the Thunder Bay Community Auditorium was renamed "Paul Shaffer Drive".