Leigh was born to Phyllis Pauline (née Cousin) and Alfred Abraham Leigh, a Doctor. Leigh was born at Brocket Hall, Hertfordshire, because his mother, in her confinement, went to stay with her parents for comfort and support while her husband was serving as a captain in the Royal Army Medical Corps. Leigh was brought up in Broughton, Salford. He is from a Jewish immigrant family whose surname, originally Lieberman, had been anglicised in 1939 "for obvious reasons". When the war ended Leigh's father began his career as a general practitioner in Higher Broughton, "the epicentre of Leigh's youngest years and the area memorialised in Hard Labour." Leigh went to Salford Grammar School, as did the Director Les Blair, his friend, who produced Leigh's first feature film Bleak Moments in 1971. There was a strong tradition of drama in the all-boys school, and an English master, called Mr Nutter, supplied the library with newly published plays. Outside of school, Leigh thrived in the Manchester branch of Habonim. He attended summer camps and winter activities over the Christmas break all round the country in the late 1950s. Throughout this time, (and though supplemented by his discovery of Picasso, Surrealism, The Goon Show, and even family visits to the Hallé Orchestra and the D'Oyly Carte), the most important part of his artistic consumption was the cinema. In 1960, 'to his utter astonishment', he won a scholarship to RADA. Initially trained as an actor at RADA, Leigh went on to start honing his directing skills at East 15 Acting School where he met the Actress Alison Steadman.

Leigh has been described as "a gifted Cartoonist ... a northerner who came south, slightly chippy, fiercely proud (and critical) of his roots and Jewish background; and he is a child of the 1960s, and of the explosion of interest in the European cinema and the possibilities of television."

Leigh was selected to be jury President of the 62nd Berlin International Film Festival.

Leigh responded negatively to RADA's agenda, found himself being taught how to 'laugh, cry and snog' for weekly rep purposes and so became a sullen student. He later attended Camberwell School of Arts and Crafts (in 1963), the Central Saint Martin's College of Art and Design, and the London School of Film Technique in Charlotte Street. When he had arrived in London, one of the first films he had seen was Shadows, an 'improvised' film by John Cassavetes, in which a cast of unknowns was observed 'living, loving and bickering' on the streets of New York, and Leigh had "felt it might be possible to create complete plays from scratch with a group of actors." Other influences from this time included Harold Pinter's The Caretaker—"Leigh was mesmerised by the play and the (Arts Theatre) production"— Samuel Beckett, whose novels he read avidly, and the surreal writing of Flann O'Brien, whose 'tragi-comedy' Leigh found particularly appealing. Influential and important productions he saw in this period included Beckett's Endgame, Peter Brook's King Lear and in 1965 Peter Weiss's Marat/Sade, a production developed through improvisations, the actors having based their characterisations on people they had visited in a mental hospital. The visual worlds of Ronald Searle, George Grosz, Picasso, and william Hogarth exerted another kind of influence. He played small roles in several British films in the early 1960s, (West 11,Two Left Feet), and played a young deaf-mute, interrogated by Rupert Davies, in the BBC TV series Maigret. In 1964–65 he teamed up with David Halliwell, and designed and directed the first production of Little Malcolm and his Struggle Against the Eunuchs at the Unity Theatre.

Between 1965 and 1970, Leigh's activity was varied. In 1965 he went to work at the Midlands Art Centre in Birmingham as a resident assistant Director and had the opportunity to start experimenting with the idea that writing and rehearsing could potentially be part of the same process. The Box Play, a family scenario staged in a cage-like box, "absorbed all sorts of contemporary ideas in art such as the space frames of Roland Pichet..it was visually very exciting,", and two more 'improvised' pieces followed. After the Birmingham interlude he found a flat in Euston, where he lived for the next ten years. In 1966/67 he worked as an assistant Director with the Royal Shakespeare Company, assisting Peter Hall on (a disastrous) Macbeth, and on Coriolanus, and Trevor Nunn on a knockabout The Taming of the Shrew. He also worked on an improvised play of his own with some professional actors called NENAA, (an acronym for the North East New Arts Assiociation), which explored the fantasies of a Tynesider working in a café, with ideas of founding an arts association in the northeast.

In the 1970s, Leigh made nine television plays. Earlier plays such as Nuts in May and Abigail's Party tended more towards bleakly yet humorously satirising middle-class manners and attitudes. His plays are generally more caustic, stridently trying to show the banality of society. Goose-Pimples and Abigail's Party both focus on the vulgar middle class in a convivial party setting that spirals out of control. The television version of Abigail's Party was made at some speed, Steadman was pregnant at the time, and Leigh's objections to flaws in the production, particularly the lighting, led to his preference for theatrical films.

In September 1973, he married Actress Alison Steadman; they have two sons: Toby (born February 1978) and Leo (born August 1981). Steadman appeared in seven of his films and several of his plays, including Wholesome Glory and Abigail's Party. They divorced in 2001. He now lives in Camden. The Actress Marion Bailey is his partner.

There was something of a hiatus in Leigh's career following the death of his father at the end of February 1985. Leigh was in Australia at the time – having agreed to attend a screenwriters conference in Melbourne at the start of 1985, he had then accepted an invitation to teach at the Australian Film School in Sydney – and he then 'buried his solitude and sense of loss in a busy round of people, publicity and talks.' He gradually extended 'the long journey home' and went on to visit Bali, Singapore, Hong Kong, China. He said later, " The whole thing was an amazing, unforgettable period in my life. But it was all to do with personal feelings, my father, where to go next, and my Desire to make a feature film. I felt I was at the end of one stage of my career and at the start of another." His 1986 project codenamed 'Rhubarb', for which he had gathered actors in Blackburn, including Jane Horrocks, Julie Walters and David Thewlis, was cancelled after seven weeks rehearsals and Leigh returned home. "The nature of what I do is totally creative, and you have to get in there and stick with it. The tension between the bourgeois suburban and the anarchist bohemian that is in my work is obviously in my life, too...I started to pull myself together. I didn't work, I simply stayed at home and looked after the boys." In 1987 Channel 4 put up some money for a short film and, with Portman Productions, agreed to co-produce Leigh's first feature film since Bleak Moments.

Leigh has cited Jean Renoir and Satyajit Ray among his favourite film makers. The critic David Thomson has written that, with the camera work in his films characterised by 'a detached, medical watchfulness', Leigh's aesthetic may justly be compared to the sensibility of the Japanese Director Yasujirō Ozu. Michael Coveney: " The cramped domestic interiors of Ozu find many echoes in Leigh's scenes on stairways and in corridors, and on landings, especially in Grown-Ups, Meantime, and Naked. And two wonderful little episodes in Ozu's Tokyo Story, in a hairdressing salon and a bar, must have been in Leigh's subconscious memory when he made The Short and Curlies (1987), one of his most devastatingly funny pieces of work, and the pub scene in Life is Sweet..."

Later In 1988, he made High Hopes, about a disjointed working-class family whose members live in a run-down flat and a council house. Leigh's subsequent films such as Naked and Vera Drake are somewhat starker, more brutal, and concentrate more on the working-class; another of his recent films, however, is a modern-day comedy, Happy-Go-Lucky. A commitment to social realism and humanism is evident throughout. More specifically, several of his films and television plays examine the domestic relationships of ordinary people, which are brought to a head or transformed by some crisis towards the end of the film.

Leigh has won several prizes at major European film festivals. Most notably he won the Best Director award at Cannes for Naked in 1993 and the Palme d'Or in 1996 for Secrets & Lies. He won the Leone d'Oro for the best film at the International Venice Film Festival in 2004 with Vera Drake. He has been nominated for the Academy Award seven times, twice each for Secrets & Lies and Vera Drake (Best Original Screenplay and Best Directing) and once for Topsy-Turvy, Happy-Go-Lucky, and Another Year (Best Original Screenplay only). He was also elected a Fellow of the Royal Society of Literature in 2008.

The anger inherent in Leigh's material, in some ways typical of the Thatcher years, softened after her departure from the political scene. In 2005, Leigh returned to directing for the stage after many years absence with his new play, Two Thousand Years at the Royal National Theatre in London. The play deals with the divisions within a left-wing secular Jewish family when one of the younger members finds religion. It is the first time Leigh has drawn on his Jewish background for inspiration.

Leigh is known for his lengthy rehearsal and improvisation techniques with actors to build characters and narrative for his films. His purpose is to capture reality and present "emotional, subjective, intuitive, instinctive, vulnerable films." His aesthetic has been compared to the sensibility of the Japanese Director Yasujirō Ozu. His films and stage plays, according to critic Michael Coveney, "comprise a distinctive, homogenous body of work which stands comparison with anyone's in the British theatre and cinema over the same period." Coveney further noted Leigh's role in helping to create stars – Liz Smith in Hard Labour, Alison Steadman in Abigail's Party, Brenda Blethyn in Grown-Ups, Antony Sher in Goose-Pimples, Gary Oldman and Tim Roth in Meantime, Jane Horrocks in Life is Sweet, David Thewlis in Naked—and remarked that the list of actors who have worked with him over the years—including Paul Jesson, Phil Daniels, Lindsay Duncan, Lesley Sharp, Kathy Burke, Stephen Rea, Julie Walters – "comprises an impressive, almost representative, nucleus of outstanding British acting talent." Ian Buruma, writing in The New York Review of Books in January 1994, noted: "It is hard to get on a London bus or Listen to the people at the next table in a cafeteria without thinking of Mike Leigh. Like other wholly original artists, he has staked out his own territory. Leigh's London is as distinctive as Fellini's Rome or Ozu's Tokyo."

Leigh is a Distinguished Supporter of Humanists UK. In 2014, Leigh publicly backed "Hacked Off" and its campaign for UK press self-regulation by "safeguarding the press from political interference while also giving vital protection to the vulnerable."

In 2015 he accepted an offer from English National Opera to direct the Gilbert and Sullivan operetta The Pirates of Penzance (cond: David Parry, design: Alison Chitty, starring: Andrew Shore, Rebecca de Pont Davies and Jonathan Lemalu). The production then toured Europe, visiting Luxembourg (Les Théâtres de la Ville de Luxembourg), Caen (Théâtre de Caen) and Saarbrucken (Saarländisches Staatstheater).