Diller began his career through a family connection in the mailroom of the william Morris Agency after dropping out of UCLA after one semester. His proximity to the company's file room meant that he could spend free time reading through the archives and learning the entire history of the entertainment industry. He was hired as an assistant by Elton Rule, then west coast head of ABC who was promoted to network President at the same time Diller went to work for him in 1964, taking him on to New York City. Diller was soon placed in charge of negotiating broadcast rights to feature films. He was promoted to Vice President of Development in 1965. In this position, Diller created the ABC Movie of the Week, pioneering the concept of the made-for-television movie through a regular series of 90-minute films produced exclusively for television.

Diller served for ten years as the Chairman and Chief Executive Officer of Paramount Pictures Corporation starting in 1974. With Diller at the helm, the studio produced hit television programs such as Laverne & Shirley (1976), Taxi (1978), and Cheers (1982) and films that include Saturday Night Fever (1977), Grease (1978), Raiders of the Lost Ark (1981) and sequel Indiana Jones and the Temple of Doom (1984), Terms of Endearment (1983), and Beverly Hills Cop (1984).

From October 1984 to April 1992, Diller held the positions of Chairman and Chief Executive Officer of Fox, Inc., the parent company of Fox network and 20th Century Fox, where he greenlighted megahit shows such as Married... with Children and The Simpsons.

Diller quit 20th Century Fox in 1992 and purchased a $25 million stake in QVC teleshopping network. He then launched a bid to purchase Paramount Communications, but lost it to Viacom. Diller resigned from QVC in 1995.

In 1997, Diller acquired the assets of Silver King Broadcasting, the collective group of over-the-air TV stations owned by then Bud Paxson's Home Shopping Network as well as the Home Shopping Network itself. Along with this acquisition, Diller also purchased the rights to the USA Network from the Bronfman family. Due to Home Shopping getting more notoriety on the cable networks from his former dealings with the QVC Network, Diller sought to repurpose the broadcast stations into independent, locally run stations as part of a station group dubbed USA Broadcasting of which the flagship station was WAMI-TV in Miami Beach, Florida.

In 2001, Diller married fashion designer Diane von Fürstenberg, mother of Prince Alexander von Fürstenberg and Princess Tatiana von Fürstenberg. He is a member of the Democratic Party and supporter of related political causes. As of January 2018, Diller's estimated net worth was $3.3 billion.

Diller has been on the board of Coca-Cola since 2002.

In 2003, on the PBS program NOW with bill Moyers, Diller voiced a strong warning against media consolidation. In the interview he referred to media ownership by a few big corporations as an oligarchy, saying the concentration strangles new ideas.

In an opinion article in the New York Times of November 7, 2006, Nicholas D. Kristof awarded him his annual Michael Eisner Award, consisting of a $5 shower curtain, for corporate rapacity and laziness.

The new headquarters for the IAC/InterActiveCorp, the IAC Building was designed by Frank Gehry and opened in 2007 at 18th Street and the West Side Highway in Manhattan's Chelsea neighborhood. The western half of the block is dedicated to the building, which stands several stories taller than the massive Chelsea Piers sporting complex just across the West Side Highway. The extra floors guarantee a panoramic Hudson River view from Diller's sixth-floor office.

Diller was the Chairman of Expedia and the Chairman of IAC/InterActiveCorp, an interactive commerce conglomerate and the parent of companies including HomeAdvisor, Match.com, Citysearch, and Connected Ventures, home of Vimeo and CollegeHumor. IAC/InterActiveCorp is also the parent company of Tinder, UrbanSpoon, The Daily Beast, and more. In 2005, IAC/InterActiveCorp acquired Ask.com, marking a strategic move into the Internet search category. He stepped down as Chief Executive Officer of IAC/InterActiveCorp on December 2, 2010.

In 2011, the Diller-von Furstenberg Family Foundation announced a donation of $20 million to support the completion of the High Line park project in Manhattan. In 2012, Diller donated $30 million to the Hollywood Fund, which provides health and social care to retired individuals from the show-business world.

Diller is responsible for what the media dubs "The Killer Dillers" – people whom Diller mentored and who later became big-time media executives in their own right. Examples include Michael Eisner (who was President of Paramount Pictures while Diller was its Chairman & CEO, and went on to become Chairman & CEO of The Walt Disney Company), Dawn Steel (future head of Columbia Pictures and one of the first women to run a major movie studio, who worked under Diller at Paramount), Jeffrey Katzenberg (head of DreamWorks Animation, principal of DreamWorks SKG, former head of Walt Disney Studios, and a head of production of Paramount under Diller), Garth Ancier, President of BBC America, and Don Simpson, who was President of Production at Paramount under Diller and Eisner and later went on to run a production company based on the Disney lot with Jerry Bruckheimer.

In 2015, Diller and his wife committed to donate $113 million toward a floating public park and performance space on a pier in the Hudson River, New York. It is stated to be the largest donation to a public park in New York's history, with completion estimated around 2019.