The song's name comes from a section of Arizona State Route 74 in north Phoenix. Said Lightfoot, "I thought it would make a good title for a song. I wrote it down, put it in my suitcase and it stayed there for eight months." The song employs "Carefree Highway" as a metaphor for the state of mind where the singer seeks escape from his ruminations over a long ago failed affair with a woman named Ann. Lightfoot has stated that Ann actually was the name of a woman Lightfoot romanced when he was age 22: "It [was] one of those situations where you meet that one woman who knocks you out and then leaves you standing there and says she's on her way."