Llwyd was born in the parish of Maentwrog, Gwynedd. His grandfather Huw Llwyd was a professional soldier who was also a noted Welsh language poet, and also had a reputation as an astrologer and magician.
Morgan Llwyd came to prominence during Oliver Cromwell's rule, and wrote about the psychology of spiritual experience. His most influential book was Llyfr y Tri Aderyn ("The Book of the Three Birds") in 1653. This is in the form of a dialogue between an eagle (representing secular authority, particularly Cromwell); a dove (representing the Puritans); and a raven (representing the Anglican establishment).
Morgan Llwyd is credited with being the first Nonconformist minister in Wrexham. He died there and is buried in the Dissenters' Burial Ground in Rhosddu, Wrexham.