Lionel Richie wrote this song especially for Rogers and also produced the track. When Motown Records' publishing company, Jobete Music, told Rogers that Lionel Richie wanted to write a song for him, he immediately flew to Las Vegas to meet him. Richie played a demo to Rogers, who loved the song and within a fortnight had recorded it. He said, "I love songs that are female orientated and that's the market I wanna get."
This followed in the footsteps of the ballads Lionel Richie wrote with his group the Commodores - songs like "Three Times A Lady" and "Sweet Love." At the time, there was a market for these over-the-top love songs where the singer proclaimed his deepest devotion in lines like, "In my eyes, I see no one else but you." Richie was better at it than anyone, and the following year, he spun gold with "Endless Love," his duet with Diana Ross. When he embarked on a solo career in 1982, he launched it with another song in this vein: "Truly."
The Metro newspaper asked Richie if he'd kept it for himself. He replied: "Just the opposite. When I wrote the song for Kenny, I called my lawyer and said: 'If I put my voice on this it's going to be a smash, I want it.' My lawyer said: 'If you give it to Kenny, it will be bigger than you ever thought.' Now this was true. What I did not realize was that not only did I have my crowd, I picked up all of Kenny's following too. And that happened to be the rest of the world."
Rogers' signature song is "The Gambler," but "Lady" is by far his biggest solo chart hit, reaching the peak of the Hot 100, Country and Adult Contemporary charts. His duet with Dolly Parton, "Islands in the Stream," also topped those charts.
Lionel Richie told Entertainment Weekly that this has been his most profitable song. Said Richie: "I have an estate that 'Lady' bought."
Lionel Richie performed "Lady" at the Grammy Awards in 2021 in honor of Kenny Rogers, who died the previous year.