In an interview with the music site "ireallylovemusic", James Murphy (the leader of the group) explained his inspiration for the song:
When I was DJing, playing Can, Liquid Liquid, ESG, all that kind of stuff, I became kind of cool for a moment, which was a total anomaly. And when I heard other DJs playing similar music I was like: 'Fuck! I'm out of a job! These are my records!' But it was like someone had crept into my brain and said all these words that I hate. Did I make the records? Did I fuck! So, I started becoming horrified by my own attitude. I had this moment of glory though. People would use me to DJ just to get them cool. They'd be like 'It's the cool rock disco guy' and this was really weird. And to be honest I was afraid that this new found coolness was going to go away and that's where 'Losing My Edge' comes from. It is about being horrified by my own silliness. And then it became a wider thing about people who grip onto other people's creations like they are their own. There is a lot of pathos in that character though because it's born out of inadequacy and love.