Lauder was born in Edinburgh and was encouraged by David Roberts to become a painter. He studied at the Trustees' Academy in Edinburgh for two years from 1822. Lauder spent time in London and then five years in Italy. He returned to London and was best known for his subject pictures, often based on the works of Sir Walter Scott, but he never received the official recognition he sought. He returned to Edinburgh in 1852 as Director of the Trustees' Academy. Lauder was also a hugely influential teacher. His pupils included Orchardson, Pettie, McTaggart and Chalmers.