Nylander was drafted by the Hartford Whalers in the third round (59th overall) in the 1991 NHL Entry Draft. In the NHL, he has played for the Hartford Whalers (1992–1994), Calgary Flames (1994–98), Tampa Bay Lightning (1999), Chicago Blackhawks (1999–2002), Washington Capitals (2002–2003), and Boston Bruins (2004), New York Rangers (2005–2007), and Washington Capitals (2007–2009).

Nylander scored his first career NHL goal on 27 November 1992 in his 16th game at the famed Boston Garden in a 5-4 Whalers loss. Rejean Lemelin was the Bruins goaltender. The following season, although he was third in scoring for the Whalers at that time, he was sent down to their AHL affiliate Springfield Indians due to repeated defensive lapses. He was recalled after four games in Springfield, but that stint makes Nylander one of the two final players who ever played for the storied Indians to be active in professional hockey.

Nylander is married to the former Camilla Altelius. He has six children - Michelle (born 1994), william (born 1996), Alexander (born 1998), Jacquline (born 2000), Stephanie (born 2003), and Daniella (born 2006). william was drafted in 2014 by the Toronto Maple Leafs as the 8th overall pick, while Alexander was also drafted 8th overall by the Buffalo Sabres in the 2016 NHL Entry Draft. Michael has brothers, Peter and Thommy.

Nylander was signed by the New York Rangers for the 2005–06 season and played well with All-Star right-winger Jaromír Jágr. He centred the first line and first power play unit. Statistically, Nylander had his best season as he helped the Rangers reach 100 points for the first time since 1994.

Following their 4-3 overtime victory over the Boston Bruins on 8 April 2006, Nylander was interviewed by NBC's Pierre McGuire. He popped the word "shit" on live television, when speaking about his relationship with Pierre McGuire back in Hartford. Bill Clement mentioned there was no 5-second delay, however Clement and the rest of the NBC crew did issue an immediate apology. Nylander scored the game-winning goal in overtime. The National Hockey League and the Federal Communications Commission never made a decision on this situation.

Nylander tore his rotator cuff during a faceoff against the Florida Panthers on 1 December 2007. Nylander missed the next four games before returning to play the next thirteen games. Eventually, Nylander was forced to have surgery to repair the tear on 16 January 2008, and missed the rest of the 2007–08 regular season and playoffs.

In the 2008-09 season, still feeling the effects of his torn rotator cuff, Nylander managed to collect only 33 points in 72 games. Many fans and hockey pundits criticized Nylander's performance and felt he didn't live up to his contract.

The following season the Washington Capitals faced salary cap restraints. Looking for move salary, they attempted to trade Michael Nylander, but found no suitors for his near $5,000,000 salary. The Washington Capitals first loaned Nylander to the Detroit Red Wings organization (who then assigned him to the Grand Rapids Griffins of the American Hockey League) and then later loaned Nylander to Jokerit of SM-liiga where he finished the 2009-10 hockey season. For the 2010-11 season, Nylander played in the Florida Panthers organization's AHL affiliate in Rochester as they filled a hole at center. His NHL rights remained owned by the Capitals through the end of the season.

On 23 October 2010, Nylander was seriously injured when he was hit from behind by Brendan Smith during the second period of a game between Rochester and the Grand Rapids Griffins. He underwent successful spinal fusion surgery on 26 October 2010 at Strong Memorial Hospital in Rochester, NY and doctors have said that he should be cleared to play again after 6 months of recovery.

Nylander then went on to play for the ZSC Lions in the National League A where he was under contract from October 2011 to December 2011. His contract was not renewed and in January 2012 he signed with the Kloten Flyers.