Lloyd was used exclusively as a relief pitcher during his ten years in the major leagues. He ended his career with 30 wins against 36 losses, 17 saves, and 97 holds. At his peak, Lloyd threw a sinking fastball that reached 90 miles (140 km) per hour and a slider. Later in his career, he added a palmball to his repertoire.
For much of his career, he was used as a left-handed specialist, or LOOGY (lefty one out guy). This type of pitcher is used against an opposing team's star left-handed hitter(s) late in a game. Lloyd excelled in this role for the New York Yankees in 1998 when he posted a career-best 1.67 ERA. This effectiveness led to the Toronto Blue Jays demanding that Lloyd be included in a package anchored by starting pitcher David Wells when the Yankees traded for Toronto starting pitcher Roger Clemens.
When Lloyd was on the Yankees, a defining moment of his career occurred, and this is what he is primarily known for now. On 19 May 1998, after a home run by Bernie Williams, pitcher Armando Benitez intentionally threw at Tino Martinez, the next batter. Benitez was instantly ejected. A bench-clearing, out-of-control brawl ensued, lasting for over five minutes and eventually ending up in the Oriole dugout. The bullpens emptied, and when Lloyd charged at Benitez, a relatively calm brawl grew ugly. Lloyd led the charge, and staggering backwards, Benitez landed a few harmless punches on Lloyd. Now, everyone was fighting, and the umpires stood at the foul lines, knowing that there was no way that they could control this circus, which was completely unnecessary, as Benitez beaned Martinez in the back. Williams hadn't even dogged around the bases after his home run, just modestly crossed them. Five players, including Lloyd (3 games) and Benitez (8 games), were suspended: Darryl Strawberry (3 games) and Jeff Nelson (2 games), another member of the bullpen who pursued Benitez with Lloyd, for the Yankees, and Alan Mills (2 games), an Oriole teammate of Benitez.
Lloyd represented his native Australia at the Olympic Games in Athens in 2004. His teammate Dave Nilsson had made history with him ten years earlier, when, on 13 April 1994, the men formed the first all-Australian battery in an MLB game.
Lloyd's wife Cindy suffered from Crohn's disease, which she succumbed to in 2000 at the age of 26. In 2000 and 2001, Graeme acted as the spokesman for the Graeme Lloyd and Jon Mechanic Field of Dreams, a charity which was dedicated in the name of Cindy Lloyd.