Coffey learned to play guitar at the age of thirteen, in the Michigan Upper Peninsula town of Copper City. In 1955, as a fifteen year-old sophomore at Detroit's Mackenzie High School, Dennis played his first record session - backing Vic Gallon in "I'm Gone", on the Gondola record label. In the early 1960s he joined The Royaltones who had had hits with "Poor Boy" in 1958 and "Flamingo Express" in 1961. The Royaltones played sessions with other artists including Del Shannon.

By the late 1960s as a member of the Funk Brothers studio band, Coffey played on dozens of recordings for Motown Records, and introduced a hard rock guitar sound to Motown record producer Norman Whitfield's recordings, including distortion, Echoplex tape-loop delay, and wah-wah; most notably heard on "Cloud Nine", "Ball of Confusion (That's What the World Is Today)" and "Psychedelic Shack" by The Temptations. He played on numerous other hit records of the era including #1 singles like Edwin Starr's "War" and Diana Ross & The Supremes "Someday We'll Be Together" and Freda Payne's #3 hit "Band of Gold". In addition, Coffey scored the blaxploitation film, Black Belt Jones.

In 1971, Coffey recorded "Scorpio" which was a million selling instrumental single that peaked at #6 on the Billboard pop chart. The instrumental track featured the former Motown "funk brother", Bob Babbitt on the bass. On January 8, 1972 Coffey became the first white artist to perform on the television show Soul Train, playing "Scorpio". "Scorpio" received a gold disc awarded by the Recording Industry Association of America on 9 December 1971.

The follow-up in 1972 was "Taurus", both credited to Coffey and the Detroit Guitar Band. Since then, he has recorded several solo albums, most of them for the Sussex and Westbound labels. While at Sussex Records Coffey arranged and produced along with Mike Theodore the million selling "Nice To Be With You" by the group, Gallery.

Coffey was interviewed in the 2002 film, Standing in the Shadows of Motown, which told the story of Funk Brothers and explained that he had sold his Fender Stratocaster to buy a Gibson Firebird after he heard Eddie Willis of Funk Brothers play it during a Motown session.

In 2004, he published a memoir, Guitars, Bars and Motown Superstars.

In 2008, he co-produced the Carl Dixon sessions at Studio A, Dearborn Heights, Michigan. Four tracks were recorded featuring some of the Funk Brothers including Uriel Jones, Bob Babbitt, Coffey and Ray Monette, plus other distinguished Detroit session musicians. Spyder Turner, Pree and Gayle Butts were vocalists on the session. The session was arranged by David J. Van De Pitte.

On April 26, 2011 (April 25 outside the US) Coffey released the self-titled album, consisting of new songs and new versions of songs which originally featured Coffey's distinctive guitar work. Promotion for the album is set to include an international tour, kicking off with several appearances at SXSW. Singer-songwriter Kendra Morris accompanied him on tour, performing backing vocals.

In 2012, Coffey was interviewed on the PBS program History Detectives, about the authenticity of an old Ampeg B-15 amplifier with the stenciled name of fellow Funk Brothers member bassist James Jamerson.

Along with Mike Theodore, Coffey discovered the folk-rock singer-songwriter Sixto Rodriguez whom is the subject of the 2012 Oscar winning film "Searching for Sugar Man" in which Coffey appears. Coffey played lead guitar on Rodriguez's first album Cold Fact.