The show involved a teenage boy named Mark (Butch Patrick) who fell into the hat of Merlo the Magician (Charles Nelson Reilly) and arrived in Lidsville, a land of living hats. The hats on the show are depicted as having the same characteristics as the humans who would normally wear them. For example, a cowboy hat would act and speak like a cowboy. The characters' houses were also hat-shaped. The villain of the show was a magician named Horatio J. HooDoo (also played by Charles Nelson Reilly in a magician's costume and make-up).
Lidsville resembles an earlier British series, Hattytown Tales, produced by Hattyland Enterprises & FilmFair Ltd. in 1969, which used an almost identical concept but different characters and was produced in claymation.
Like predecessors H.R. Pufnstuf and The Bugaloos, Lidsville ran for only one season (1971–1972), with reruns airing the following year (1972–1973). Also like H.R. Pufnstuf, Lidsville's title and subject matter were often interpreted as references to drug use: the word "lid" is slang for a hat or cap (as in "flip your lid"), but "lid" is also early-1970s slang for an ounce of marijuana.
The complete series was released on DVD in the United States in January 2005. Extra features in the set included interviews with Charles Nelson Reilly, Butch Patrick and Billie Hayes. They also provided commentary on some of the episodes.