On June 13, 2010, Lilly took a no-hitter into the 9th against the Chicago White Sox. In the ninth, he gave up a lead off single to Juan Pierre, then was lifted for relief pitcher Carlos Mármol, who got the save, getting out of a bases loaded jam, for a 1-0 Cub victory. This was the longest outing that Lilly held a team hitless. The no-hitter would have been the first pitched at Wrigley Field since Milt Pappas in 1972.
On July 31, 2010, Lilly and Ryan Theriot were traded to the Los Angeles Dodgers for Blake DeWitt, Brett Wallach, and Kyle Smit. Lilly won his first five starts as a Dodger posting a 1.83 ERA. He finished his season with the Dodgers with a record of 7-4 and a 3.52 ERA in 12 starts, which included a complete game shutout on August 19 against the Colorado Rockies. On October 19, 2010, Lilly agreed to a 3-year, $33 million, contract with the Dodgers. After a disappointing first half of the season in 2011, where he had an ERA of 4.79, Lilly pitched much better in the second half, with a 2.94 mark, also allowing only 9 homers in the second half after allowing 19 the first half. His final record was 12-14 with a 3.97 ERA in 33 starts.
Lilly's wife, Natasha (Tasha), is a veterinarian. They are active advocates for animal humane societies, and reside in Oakhurst, California. Their son, Theodore Roosevelt Lilly IV, was born on March 14, 2010.