Daniels attended Phillips Exeter Academy and then Harvard University where he wrote for the Harvard Lampoon with Conan O'Brien. After graduating in 1984, the two accepted jobs at Not Necessarily the News, but they were soon fired due to budget cuts. The two later met Lorne Michaels in late 1987 and were given a three-week try-out in the Saturday Night Live writing staff. While on the staff, he won an Emmy Award for Outstanding Writing for a Variety, Music or Comedy Program. Daniels left the writing staff in 1990.

Daniels joined the writing staff of The Simpsons in 1993. He was hired in the fifth season following the departures of many of the original team of Writers. His first day also coincided with O'Brien's last day on the series.

In 2005, Daniels adapted the popular BBC mockumentary series The Office for American audiences. The series premiered to mixed reviews, so the Writers worked to make it more "optimistic" and make the lead character, Michael Scott, more likable. The second season was better received and it was named the second best TV series of 2006 by James Poniewozik, writing that "Producer Greg Daniels created not a copy but an interpretation that sends up distinctly American work conventions [...] with a tone that's more satiric and less mordant. [...] The new boss is different from the old boss, and that's fine by me." He gave the acceptance speech at the 58th Annual Primetime Emmy Awards when the American version of The Office won the award for Outstanding Comedy Series, and he received an award for Outstanding Writing for a Comedy Series at the 59th Annual Primetime Emmy Awards.

Daniels has received several awards and nominations. He has been nominated for twenty Emmys and has won four. Those wins are for: Outstanding Writing for a Variety, Music or Comedy Program for his work on Saturday Night Live, Primetime Emmy Award for Outstanding Animated Program for the Simpsons episode, "Lisa's Wedding," Outstanding Comedy Series for The Office and Outstanding Writing for a Comedy Series for The Office: Gay Witch Hunt. Daniels was also awarded Austin Film Festival's Outstanding Television Writer Award in 2008.

He joined the writing staff of The Simpsons during the fifth season, and he wrote several classic episodes including "Lisa's Wedding," "Bart Sells His Soul" and "22 Short Films About Springfield." He left the series in order to co-create another long-running animated series, King of the Hill, with Mike Judge. The series ran for thirteen years before it was cancelled in 2009. During the series run, he worked on several other series, including the American version of The Office and Parks and Recreation. As of 2016, he is an executive Producer on the TBS series People of Earth.

Daniels met Susanne Dari Lieberstein while she was answering phones at Saturday Night Live for Lorne Michaels. They eventually married and had four children: Maya, Charlotte, Haley, and Owen. She is the sister to Paul Lieberstein, Writer for King of the Hill and the replacement showrunner of The Office for Daniels. He is also the brother-in-law to Office Writer Warren Lieberstein and Office cast member Angela Kinsey until her divorce in 2010.

In 2011, Daniels made a deal with NBC to produce several series for Universal Television. He also developed the British series Friday Night Dinner for American audiences. The remake was picked up for a pilot, which was written by Daniels and directed by Ken Kwapis, and featured Allison Janney and Tony Shalhoub as the mother and father. The pilot was eventually not picked up for series. He also teamed with Mindy Kaling and Alan Yang to work on two differing animated series for NBC and made a deal to executive produce a new pilot written by Office Writer Owen Ellickson and starring Office cast member Craig Robinson.

Daniels' work has received mainly positive reception. Out of the six TV series that Daniels has worked on, four of them—Saturday Night Live, The Simpsons, King of the Hill and The Office—were named among Time reviewer James Poniewozik's All Time 100 TV Shows. His work on The Simpsons has received acclaim from critics and fans. Two of his episodes, "Bart Sells His Soul" and "22 Short Films About Springfield," were listed among the show's creative team's top five favorite episodes in 2003. Series creator Matt Groening and executive Producer James L. Brooks have named his episodes among their favorites. Other staff members and several critics have praised his work. His other animated series and his first credit as a creator, King of the Hill, has received positive reviews as well. IGN named it the 27th best animated television series, and the site mainly complimented the series for its subtle character humor. The series currently ranks as the third-longest running animated television series, after The Simpsons and South Park.