Lane returned to Broadway as Prince Fergus in the short-lived musical "Merlin" (1983), starring master illusionist Doug Henning and featuring an adolescent Christian Slater, and was on the Great White Way again in the even shorter-lived musical version of "The Wind and the Willows" ("It closed over a weekend.") He also appeared Off-Broadway in plays like the New York Shakespeare Festival's "Measure for Measure" (1985) and "The Common Pursuit" (1986), but it was his role in the 1987 national tour of Neil Simon's "Broadway Bound" that led to a starring role in "The Film Society" (1988), the first full-length play from a very young Jon Robin Baitz. Assuming a British accent, Lane garnered his first real acclaim as Baitz's mild-mannered yet ruthless South African schoolteacher, and the exuberant actor raised his profile higher as a Maria Callas obsessive in "The Lisbon Traviata" (1989), his first collaboration with playwright Terrence McNally, with whom he would quickly reteam on a revival of "Bad Habits" (1990) and the Off-Broadway hit "Lips Together, Teeth Apart" (1991).

After making his feature debut with a small part in "Ironweed" (1987), Lane followed with comic supporting roles in "Joe Versus the Volcano" (1990) and in "He Said, She Said" (1991) as the harried director of a morning TV-talk show. McNally wrote the role of Michelle Pfeiffer's gay neighbor in Garry Marshall's "Frankie and Johnny" (also 1991) expressly for him, and he continued in films with the Paul Rudnick-scripted "Addams Family Values" and as Michael J Fox's brother in "Life with Mikey" (both 1993). He received praise for his performance as a priest obsessed with musical comedies in "Jeffrey" (1995), scripted by Rudnick from his play, but before that enjoyed a huge hit as the voice of the feisty meerkat Timon in Disney's animated "The Lion King" (1994). Lane teamed with fellow stage actor Ernie Sabella's warthog Pumbaa, and the pair enchanted children, singing one of the more memorable numbers ("Hakuna Matata") in the film. He also voiced Timon for the TV version, "The Lion King's Timon and Pumbaa" (CBS, 1995), which earned him a Daytime Emmy Award.

Early in his career, Lane had changed his first name from Joseph to Nathan after playing Nathan Detroit in a 1977 NYC production of "Guys and Dolls". He returned to the role in the acclaimed 1992 Broadway revival, earning his first Tony nomination as Actor in a Musical. Back on Broadway as the Sid Caesar-like star of Neil Simon's "Laughter on the 23rd Floor" (1993), he followed with McNally's Tony-winning "Love! Valour! Compassion!" (1994), playing a wise-cracking, HIV-positive gay man who discovers love. Expected to reprise his role in the 1997 film version, Lane, citing scheduling difficulties, withdrew, temporarily driving a wedge between himself and the playwright who had meant so much to his career. (Jason Alexander inherited the role). The busy actor, however, appeared in a series of commercials for NyQuil, portrayed one of the mentally-challenged residents in the TV-movie "The Boys Next Door" (CBS, 1996), brought his own take to the Cowardly Lion in "The Wizard of Oz in Concert: Dreams Comes True" (TNT, 1995) and offered snide, witty comments as host of "The 50th Annual Tony Awards" (CBS, 1996). Chosen for his duties partly due to his triumph in the Broadway revival of Stephen Sondheim's "A Funny Thing Happened on the Way to the Forum", he topped the evening off by taking home the coveted prize as Actor in a Musical.

Lane experienced his first taste of screen stardom after portraying the flamboyant drag queen in Mike Nichols' "The Birdcage" (1996), an Americanized remake of the smash French farce "La Cage aux Folles" (1978). In co-star Robin Williams, he found someone equally daring, and Nichols allowed the two their share of improvisational takes, which kept the director laughing constantly, even if he didn't use some of the their more outrageous work. As the fussy, effeminate Albert, Lane, despite lots of competition from the likes of Gene Hackman (in drag) and a wonderful Hank Azaria as the Guatemalan houseboy, walked away with the film. The normally manic Williams was somewhat muted in his role as Albert's lover, and Nichols told Time (March 25, 1996): "I think what happened in the first few weeks of rehearsal was that Robin gave the picture to Nathan, in a very loving way." Though gay activists bristled at the stereotypical treatment, the film was sufficiently mainstream to earn in excess of $100 million. For his next film, Lane co-starred with British comic Lee Evans as the hapless victims of a wily rodent in the DreamWorks SKG-produced comedy "Mouse Hunt" (1997), which, though no "Birdcage", was a solid commercial hit.

A guest starring role introduced him to the creative team behind "Frasier" (NBC) and eventually led to his own starring vehicle, the NBC sitcom "Encore! Encore!" (1998-99). It was his second foray into regular series TV, having acted on the long ago "One of the Boys" (NBC, 1982), staring Mickey Rooney, Meg Ryan and Dana Carvey. Lane proved ultimately unsympathetic as an opera singer who returns to his family's California winery to wreak havoc when his voice fails him, and the show performed poorly in the ratings despite some critical acclaim. Under-utilized as a vision therapist in Irwin Winkler's "At First Sight", he scored another smash as the snide voice of Snowbell, the fluffy Persian nemesis of "Stuart Little" (both 1999), a role he reprised for the 2002 sequel. After starring opposite Bette Midler in the Rudnick-scripted biopic of Jacqueline Susann, "Isn't She Great", Lane offered a marvelous turn as the vaudevillian clown of Kenneth Branagh's musical version of "Love's Labour's Lost" and essayed an alcoholic entertainer in Alan Rudolph's "Trixie" (all 2000). That year, the busy actor lent his voice-over talents to Don Bluth and Gary Goldman's animated feature "Titan A.E." and provided the voice of Spot, a talking canine who disguises himself as a boy named Scott in order to go to school, where he becomes "Teacher's Pet" (ABC), an animated series from Disney (he would reprise the role for a 2004 feature film). He also returned to Broadway as the title character in a revival of "The Man Who Came to Dinner" before landing one of the best roles in his career. Once again stepping into a role created by Zero Mostel, Lane won critical kudos for his turn as the con man/wanna-be theatrical impresario Max Biayalstock, opposite Matthew Broderick's wide-eyed theater neophyte Leo Bloom, in the 2001 stage musical version of Mel Brooks' film comedy "The Producers," which became a major Broadway sensation and was re-adapted into a 2005 feature film.

Thoughe Lane's 2003 political-minded comedy series "Charlie Lawrence," as an actor-turned-senator who happens to be gay, failed to click with audiences, he remained a welcome presence on the big screen with a supporting turn in "Nicholas Nickleby" (2002) and strategically hilarious cameos in "Austin Powers in Goldmember" (2002) and "Win a Date with Tad Hamilton!" (2004). Back on stage he took the role of Lou Nuncle in Terrence McNally's "Dedication or the Stuff of Dreams" in 2005, followed later that year by the highly anticipated Broadway reunion with Broderick in Neil Simon's "The Odd Couple," with Lane playing the sloppy Oscar Madison.