Lee's career began in 1991 after a KBS talent audition and making his debut in the television drama Asphalt My Hometown. Lee drew attention with the action drama Asphalt Man and romantic film The Harmonium in My Memory, but it was only in 2000 that he made his big breakthrough with Park Chan-wook's Joint Security Area. The film broke the box office record and became the highest grossing Korean film at the time. Lee's role as a border-guard soldier won him the Best Actor award at the Busan Film Critics Awards.

Lee has a younger sister, Lee Eun-hee, who was Miss Korea in 1996. He graduated from Hanyang University with a major in French Literature and the Graduate School of Chung-Ang University with a major in Theater and Cinematography. In his spare time, Lee Byung-hun practices taekwondo.

In 2001, his popularity continued to climb when he starred in melodramas Beautiful Days and Bungee Jumping of Their Own. In 2003, he received the Grand Prize at the SBS Drama Awards and Best Actor at the Baeksang Arts Awards for his role in the poker drama All In. Due to his film and television roles, Lee experienced a rise in popularity across Asia, particularly Japan.

From 2005, he focused on film, earning critical acclaim for his performance in A Bittersweet Life directed by Kim Jee-woon, which was screened out of competition at the Cannes Film Festival. Lee was nominated for Best Actor at the Blue Dragon Film Awards and Grand Bell Awards, and won at the Chunsa Film Art Awards, Baeksang Arts Awards and the Korean Association of Film Critics Awards.

Lee Byung-hun is noted in the video game industry for providing his likeness for the main character, Wayne Holden, in the 2006 game Lost Planet: Extreme Condition, for the Xbox 360, PS3 & PC.

Lee Byung-hun was sued by his girlfriend who broke up in 2009. His girlfriend claimed Lee hurt her mental and physical damage because she only used him for entertainment, and sued him for compensation and chronic gambling charges worth 100 million won. Lee, on the other hand, claimed that her claims were all false, and that the men behind her claim demanded money from her to reveal the truth about her relationship with her girlfriend, and then responded with the threat.

Lee Byung-hun's chronic gambling was cleared of charges in 2010, and her claim for damages was dropped because she also refused to participate. On the other hand, Kang was sentenced to one year in prison and three years of probation in 2013 on charges of assault and intimidation against Iris.

Lee received acclaim for his portrayal of dual roles in the lavish period drama Masquerade. The film was a box office hit, becoming the 7th film in Korean history to surpass 10 million admissions. Lee won Best Actor at the Grand Bell Awards for his performance. and the Best Performance by an Actor at the 2013 Asia Pacific Screen Awards. On June 23, 2012, Lee, along with Ahn Sung-ki, became the first Korean actors to leave their hand and foot prints on the forecourt of Grauman's Chinese Theatre in Hollywood, Los Angeles. He was recognized as an emerging star in Hollywood for his role of Storm Shadow in G.I. Joe: The Rise of Cobra, and its sequel, G.I. Joe: Retaliation.

Lee married Actress Lee Min-jung on August 10, 2013 at the Grand Hyatt Seoul. The couple had briefly dated in 2006, then resumed their relationship in 2012. Lee's wife gave birth to their first child, a son, Lee Joon-hoo, on March 31, 2015.

In September 2014, Lee was embroiled in a legal battle with two women, singer Dahee from K-pop girl group GLAM and model Lee Ji-yeon, who blackmailed him for large sums of money in exchange for not revealing a compromising video of the actor Lee making sexual jokes. The two women were sentenced to a year and two months in jail respectively, both suspended for two years.

Following his sex-chat scandal, Lee returned with the martial arts film Memories of the Sword in 2015. The film was shot in late 2013 and scheduled for release in 2014, but was postponed due to Lee's scandal. He received praise for his scene-stealing role as a young and ambitious warrior with a lowly status, but the film failed to do well and was criticized for its messy plot. The same year, Lee played a T-1000 in Terminator Genisys opposite Arnold Schwarzenegger. He then starred in Woo Min-ho's political crime thriller Inside Men, which became the top grossing R-rated movie of all-time at the Korean Box Office. Touted as the "star" of the film, Lee received critical acclaim and swept Best Actor awards at various film awards ceremonies.

In 2016, Lee featured in the American crime thriller Misconduct. On 28 February 2016, Lee attended the 88th Academy Awards and presented the "Best Foreign Language Film" award with Actress Sofia Vergara. He was the first Korean actor to present an award at the Oscars. The same year, Lee co-starred as knife-wielding gunslinger Billy Rocks in The Magnificent Seven with Denzel Washington, Chris Pratt, and Ethan Hawke.

In March 2017, Lee signed on with major Hollywood agency United Talent Agency. He was cast in the Hollywood action film Radiance. The film is directed by Patrick Lussier, who worked with Lee in Terminator Genisys.

Lee will make his television comeback in Mr. Sunshine (2018), written by Kim Eun-sook.