For his contribution to television, Granger has a star located at 1551 Vine Street on the Hollywood Walk of Fame.

His wealthy father owned a Willys-Overland automobile dealership, and the family frequently spent time at their beach house in Capitola. Following the stock market crash in 1929, the Grangers were forced to sell both their homes and most of their personal belongings and move into an apartment above the family Business, where they remained for the next two years. As a result of this financial setback and the loss of their social status, both of Granger's parents began to drink heavily. Eventually the remainder of their possessions were sold at auction to settle their debts, and the elder Granger used the last car on his lot to spirit away the family to Los Angeles in the middle of the night.

In 2007, Granger published the memoir Include Me Out, co-written with domestic partner Robert Calhoun (born 24 November 1930). In the book, named after one of Goldwyn's famous malapropisms, he freely discusses his career and personal life. Calhoun died of lung cancer in New York, New York on May 24, 2008, at age 77.

Granger returned to civilian life and was pleased to discover his parents had curbed their drinking and were treating each other more civilly. Goldwyn increased his weekly salary to $200 and presented him with a 1940 Ford Coupe. The actor was introduced to Saul Chaplin and his wife Ethel, who became his lifelong mentor, confidante and best friend. Through the couple, Granger met Betty Comden, Adolph Green, Jerome Robbins, Leonard Bernstein and Gene Kelly, who invited him to join his open house gatherings that included Judy Garland, Lena Horne, Frank Sinatra, Betty Garrett, Johnny Mercer, Harold Arlen and Stanley Donen. Most influential among his new acquaintances was Director Nicholas Ray, who cast Granger in his film noir Thieves Like Us. The film was nearing completion in October 1947 when Howard Hughes acquired RKO Radio Pictures, and the new studio head shelved it for two years before releasing it under the title They Live by Night in a single theater in London. Enthusiastic reviews led RKO to finally release the film in the States in late 1949. During the two years it had remained in limbo, it had been screened numerous times in private screening rooms, and one of the people who saw it during this period was Alfred Hitchcock, who was preparing Rope.

In 1948, Hitchcock cast him in Rope, a fictionalized account of the Leopold and Loeb murder case, which earned mixed reviews, but much critical praise for Granger. Hitchcock then cast him again in Strangers on a Train, as a tennis star drawn into a double murder plot by a wealthy psychopath, played by Robert Walker. Granger would describe this as his happiest film-making experience, and was deeply saddened by Walker's death shortly after shooting.

On December 31, 1950, Granger picked up close friend Shelley Winters to escort her to Sam Spiegel's traditional New Year's Eve gala. The Actress kept him waiting for nearly two hours, and they argued while en route to the party. Once there, they went their separate ways, and Granger met Ava Gardner. The two left to hear Nat King Cole perform at a nearby nightclub and then went to Granger's home, where they began an intense affair that lasted until Gardner began filming Show Boat a month later.

Eager to work with Vincente Minnelli, Granger accepted a role opposite Leslie Caron and Ethel Barrymore in Mademoiselle, one of three segments in the 1953 MGM film The Story of Three Loves. The film's Producer, Gottfried Reinhardt, also directed the other two segments, and he mercilessly edited Mademoiselle in order to give his stories more screen time. Unhappy with the direction his career was taking, Granger sought solace with Shelley Winters, who was separated from Vittorio Gassman, and the two friends resumed their love affair, which at one point nearly had culminated in marriage. Their relationship was complicated, but Granger felt "it works for us."

In 1955, Granger moved to New York and began studying with Bob Fosse, Gloria Vanderbilt, James Kirkwood and Tom Tryon in a class taught by Sandy Meisner at the Neighborhood Playhouse. During this period he made his Broadway debut in The Carefree Tree, a play with music based on an old Chinese legend. The cast included Janice Rule as Granger's love interest and Alvin Ailey, Frances Sternhagen, Jerry Stiller and Sada Thompson in supporting roles. The play closed after only 24 performances, but shortly after its demise Rule moved in with Granger, and before long they were making wedding plans. They gradually realized the love their characters had felt on stage actually had not carried over into real life, and the two went their separate ways, although they remained friends until her death in 2003.

In 1959, Granger returned to Broadway as Fitzwilliam Darcy opposite Polly Bergen as Elizabeth Bennet in First Impressions, a musical adaptation of Pride and Prejudice with a book and direction by Abe Burrows. The tryout in New Haven was a disaster, and reviews were mixed. Things improved slightly during the Philadelphia run, but by the time the production reached New York, Bergen – who was fighting bitterly with co-star Hermione Gingold – was experiencing serious vocal problems, and some of her songs would be cut during each performance, creating confusion for the rest of the cast. Only two of seven critics wrote favorable reviews, Bergen was replaced by understudy Ellen Hanley, and the musical closed in less than three months. Later that year, he was cast in The Warm Peninsula, a play by Joe Masteroff. Co-starring Julie Harris, June Havoc and Larry Hagman, it received fair reviews and closed after only 86 performances.

Despite his three unsuccessful Broadway experiences, Granger continued to focus on theater in the early 1960s. He accepted an invitation from Eva Le Gallienne to join her National Repertory Theatre. During their first season, while the company was in Philadelphia, John F. Kennedy was assassinated. The President had attended NRT's opening night and post-performance gala in the nation's capital, so the news hit everyone in the company especially hard. Granger had become a close friend of production supervisor Robert Calhoun, and although both had felt a mutual attraction, they never had discussed it. That night they became lovers.

In the early 1970s, Granger and Calhoun moved to Rome, where the actor made a series of Italian language films, most notably They Call Me Trinity. He also appeared on several soap operas, including One Life to Live, on which his portrayal of Will Vernon garnered him a nomination for the Daytime Emmy Award for Outstanding Lead Actor in a Drama Series, The Edge of Night, and As the World Turns, produced by Calhoun. Granger acted alongside Mario Adorf in the Italian slasher film La Polizia chiede aiuto, which was directed by Massimo Dallamano. In 1974, he appeared in an episode of the ABC police drama Nakia.

Granger finally achieved some success on Broadway in The Seagull, The Crucible, The Glass Menagerie, and Deathtrap. He starred opposite Barbara Cook in a revival of The King and I at the off-Broadway New York City Center, and in 1979 he was cast in the Roundabout Theatre Company production of A Month in the Country. In 1986 he won the Obie Award for his performance in the Lanford Wilson play Talley & Son.

Later he appeared in several documentaries discussing Hollywood in general and Alfred Hitchcock in particular. In 1995 he was interviewed on camera for The Celluloid Closet, discussing the depiction of homosexuality in film and the use of subtext in various films, including his own.

In 2003, Granger made his last film appearance in Broadway: The Golden Age, by the Legends Who Were There. In it, he tells the story of leaving Hollywood at the peak of his fame, buying out his contract from Samuel Goldwyn, and moving to Manhattan to work on the Broadway stage.

Granger died of natural causes on March 27, 2011, at age 85. He was cremated and his ashes given to family after a Service at The Riverside restaurant.

Having reconciled, Granger and Winters went to New York City, where they audited classes at the Actors Studio and the Neighborhood Playhouse School of the Theatre. Winters subscribed to the concept of method acting, but Granger felt an actor "had to be faithful to the text, not adapt it to some personal sense memory," and their disagreement triggered more arguments. Their plan to pursue individual training programs was disrupted when both were called back to Hollywood. Goldwyn cast Granger in I Want You, a drama about the effect the Korean War has on an American family still trying to recover from World War II. Granger thought the screenplay by Irwin Shaw was "not only dull, but felt dated," but welcomed the opportunity to work with Dana Andrews and Dorothy McGuire. Goldwyn expected the film to be as successful as The Best Years of Our Lives, but it proved to be as "tepid and old-fashioned" as Granger feared and, opening after cease-fire negotiations with Korea had begun, no longer topical, and it died at the box office. His subsequent projects – a screwball comedy with Winters called Behave Yourself!, the Gift of the Magi segment of the anthology film O. Henry's Full House, and the musical film Hans Christian Andersen – were no more successful. During the filming of the latter, he appeared on set in a Camel commercial.