Lifelong few-shot customization for text-to-image diffusion aims to continually generalize existing models for new tasks with minimal data while preserving old knowledge. Current customization diffusion models excel in few-shot tasks but struggle with catastrophic forgetting problems in lifelong generations. In this study, we identify and categorize the catastrophic forgetting problems into two folds: relevant concepts forgetting and previous concepts forgetting. To address these challenges, we first devise a data-free knowledge distillation strategy to tackle relevant concepts forgetting. Unlike existing methods that rely on additional real data or offline replay of original concept data, our approach enables on-the-fly knowledge distillation to retain the previous concepts while learning new ones, without accessing any previous data. Second, we develop an In-Context Generation (ICGen) paradigm that allows the diffusion model to be conditioned upon the input vision context, which facilitates the few-shot generation and mitigates the issue of previous concepts forgetting. Extensive experiments show that the proposed Lifelong Few-Shot Diffusion (LFS-Diffusion) method can produce high-quality and accurate images while maintaining previously learned knowledge.