Perahia began studying the piano at age four with a teacher he says was "very limiting" because she made him play a single piece until it was perfect. He says his musical interests blossomed at age fifteen for reasons he can't explain, and he began to practice seriously. At seventeen, Perahia attended Mannes College, where he studied keyboard, conducting, and composition with his teacher and mentor Mieczysław Horszowski. During the summer, he also attended Marlboro, where he studied with musicians Rudolf Serkin, Alexander Schneider, and Pablo Casals, among others. He played duets for piano four hands with Serkin, who later made Perahia his assistant at the Curtis Institute in Philadelphia, a position he held for over a year.
In 1973 he worked with Benjamin Britten and Peter Pears at the Aldeburgh Festival, and with fellow pianist Radu Lupu. He was co-artistic director of the Festival from 1981 to 1989.
In the 1980s, Perahia was invited to work with Vladimir Horowitz, an admirer of his art. Perahia says this had a defining influence on his pianism.
Perahia's first major recording project was the complete piano concertos by Mozart, conducted from the keyboard with the English Chamber Orchestra. In the 1980s, he also recorded all the Beethoven piano concertos, with Bernard Haitink and the Royal Concertgebouw Orchestra.
In 1990, Perahia suffered a cut to his right thumb, which became septic. He took antibiotics for this condition, but they affected his health. In 1992, his career was threatened by a bone abnormality in his hand causing inflammation requiring several years away from the keyboard, and a series of operations. During that time, he says, he found solace through studying the music of Johann Sebastian Bach. After being given the all-clear, he produced in the late 1990s a series of award-winning recordings of Bach's keyboard works, most notably a cornerstone rendition of the Goldberg Variations.