Cheadle was born in Kansas City, Missouri, the son of Bettye (née North), a bank manager and psychology teacher, and Donald Frank Cheadle, Sr., a clinical psychologist. He has a sister, Dawn, and a brother, Colin. Cheadle graduated in 1982 from East High School in Denver, Colorado. Cheadle went on to graduate from the California Institute of the Arts.

He appeared in a late 1980s video (It's The Reel Thing) with Angela Winbush as a dancer. Cheadle acted in Hamburger Hill in 1987. He also played the role of "Jack" in the April 1, 1988 "Jung and the Restless" episode of Night Court. Although his character "Jack" was supposed to be 16 years old, Cheadle was 24 at the time., .

Cheadle then played the role of 'Rocket' in the 1988 movie Colors. In 1989, he appeared in a video for Angela Winbush's #2 hit single "It's the Real Thing", performing dance moves in an orange jump suit, working at a car wash. In 1990, he appeared in an episode of The Fresh Prince of Bel-Air titled "Homeboy, Sweet Homeboy", playing Will Smith's friend and Hilary's first love interest Ice Tray. In 1992, he received a supporting role in The Golden Girls spin-off The Golden Palace. Although the show was highly publicized, it was cancelled after one season. Cheadle subsequently played district attorney John Littleton on two seasons of Picket Fences.

Cheadle first received widespread notice for his portrayal of Mouse Alexander in the film Devil in a Blue Dress, for which he won Best Supporting Actor awards from the Los Angeles Film Critics Association and the National Society of Film Critics, and was nominated for similar awards from the Screen Actors Guild and the NAACP Image Awards. Following soon thereafter was his performance in the title role of the 1996 HBO TV movie Rebound: The Legend of Earl "The Goat" Manigault. A legend among American street basketball players, Manigault is considered by many to be the best streetball player that never reached the NBA as a professional. He also starred in the 1997 film Volcano, directed by Mick Jackson.

Cheadle's fame spread with a regular role as the district attorney on the television series Picket Fences. Cheadle's other television credits include Emmy-nominated performances in the movies The Rat Pack, A Lesson Before Dying, Things Behind the Sun and in a guest appearance on ER. The last of these spanned four episodes during the show's ninth season, in which he portrayed Paul Nathan, a medical student struggling to cope with Parkinson's disease. He has made appearances in films including Rosewood, The Family Man, Boogie Nights, a cameo appearance in the film Abby Singer, Out of Sight, Traffic, and Ocean's Eleven. These last three were directed by Steven Soderbergh. In 2005, Cheadle was nominated for the Academy Award for Best Actor for his portrayal of Paul Rusesabagina in the film Hotel Rwanda. He also starred in, and was one of the producers of Crash, which won the 2005 Academy Award for Best Picture. For his performance in Crash, Cheadle was nominated for BAFTA and Screen Actors Guild Award for Best Supporting Actor. He also played the main character in the movie Traitor. Cheadle also starred in Hotel for Dogs by Dreamworks.

Cheadle was to make his directorial debut with the adaptation of Elmore Leonard's Tishomingo Blues. In a July, 2007 interview he stated, "'Tishomingo' is dead..."

Cheadle has also appeared in NFL commercials promoting the Super Bowl from 2002 to 2005. He so regularly appeared for the NFL in its Super Bowl advertising that in 2006, in a drive to have fans submit their own advertising ideas, the NFL sought his permission to reference his previous commercials to portray themselves as having no new ideas – "he quickly signed off on the idea and found it funny." Abe Sutton (along with Etan Bednarsh), one of the finalists in this NFL contest, played on this commercial by proposing an ad where an entire team of football players are Don Cheadle.

Cheadle and Boondocks creator Aaron McGruder, are working together to launch a comedy show on NBC. The "project revolves around mismatched brothers who reunite to open a private security company." Cheadle will serve as an executive producer, along with McGruder, who will write the script.

In 2009, Cheadle performed in The People Speak (film) a documentary feature film that uses dramatic and musical performances of the letters, diaries, and speeches of everyday Americans, based on Historian Howard Zinn's "A People's History of the United States”.

In 2010, Cheadle assumed the role of James Rhodes in the film Iron Man 2, replacing Terrence Howard, his Crash co-star.