Dassin was born in Middletown, Connecticut, one of eight children of Berthe Vogel and Samuel Dassin, a barber. His family was of Ukrainian-Jewish and Polish-Jewish extraction. Dassin grew up in Harlem and went to Morris High School in the Bronx. He joined the Communist Party USA in the 1930s and left it after the Molotov–Ribbentrop Pact in 1939. He started as a Yiddish actor with the ARTEF (Yiddish Proletarian Theater) company in New York. He collaborated on a film with Jack Skurnick that was incomplete because of Skurnick's early death.

Dassin quickly became better known for his noir films Brute Force (1947), The Naked City (1948), and Thieves' Highway (1949), which helped him to become "one of the leading American filmmakers of the postwar era."

Dassin said Darryl F. Zanuck in 1948 called him into his office to inform him he would be blacklisted, but he still had enough time to make a movie for Fox. Dassin was blacklisted in Hollywood during the production of Night and the City (1950). He was not allowed on the studio property to edit or oversee the musical score for the film. He also had trouble finding work abroad, as U.S. distribution companies blacklisted the U.S. distribution of any European film associated with artists blacklisted in Hollywood. In 1952, after Dassin had been out of work for two years, Actress Bette Davis hired him to direct her in the Broadway revue Two's Company. The show closed early, however, and Dassin left for Europe. Dassin did not work as a film Director again until Rififi in 1954 (a French production). Most of Dassin's films in the decades following the blacklist are European productions. His prolific later career in Europe and the affiliation with Greece through his second wife, combined with a Common pronunciation of his surname as "Da-SAN" in Europe, as opposed to "DASS-in" in the United States leads to a Common misconception that he was a European Director.

For his 1955 film Rififi, Dassin earned the Best Director award at the Cannes Film Festival. His 1960 film Never on Sunday earned the music Academy Award (Manos Hadjidakis,(Greek: Τα παιδιά του Πειραιά), Ta Paidia tou Peiraia), and the Cannes Film Festival best Actress award (Melina Mercouri). In 1982, he was a member of the jury at the 34th Berlin International Film Festival.