When he was ten, Rudd's family moved to Lenexa, Kansas. His family also spent three years living in Anaheim, California, because of his father's occupation. Rudd attended Broadmoor Junior High and graduated from Shawnee Mission West High School in the class of 1987. Rudd attended the University of Kansas, where he majored in theater. He was a member of the Sigma Nu fraternity's Nu Chapter there. He studied at the American Academy of Dramatic Arts/West in Los Angeles. Rudd spent three months studying Jacobean drama at the British American Drama Academy based in Oxford, England. While attending acting school, Rudd worked as a Bar Mitzvah disc jockey.

Rudd made his acting debut in 1992 with the television drama Sisters where he played Kirby Quimby Philby. In 1994, he appeared in Wild Oats for six episodes. Rudd left Sisters in 1995 to appear in the comedy film Clueless with Alicia Silverstone. He also appeared in Halloween: The Curse of Michael Myers, William Shakespeare's Romeo + Juliet, The Locusts, Overnight Delivery, The Object of My Affection, and 200 Cigarettes. He was in the 1999 film The Cider House Rules that earned him and the cast a SAG nomination for Outstanding Performance by a Cast in a Motion Picture.

Rudd has also appeared in Broadway plays, the first being The Last Night of Ballyhoo as Joe Farkas in 1997. The next year he appeared in Twelfth Night with Kyra Sedgwick and Max Wright at the Lincoln Center Theatre. In 2006, he appeared in the Broadway production of Richard Greenberg's Three Days of Rain with Bradley Cooper and Julia Roberts at the Bernard Jacobs Theater.

He played FBI Agent Ian Curtis in Benny Chan's 2000 Hong Kong action film Gen-Y Cops. In 2002, he was cast on the sitcom Friends as Mike Hannigan, who dates and then marries Phoebe Buffay, played by Lisa Kudrow. In 2006, he appeared in several episodes of Reno 911! as "Guy Gerricault" (pronounced "jericho"), the coach of a lamaze class, and then portrayed a drug lord in the Reno 911!: Miami film. He guest-starred as a has-been 1990s rock star, Desmond Fellows, on the television series Veronica Mars, in the 2007 episode "Debasement Tapes".

Rudd reprised his role as Andy from Wet Hot American Summer in the Netflix prequel Wet Hot American Summer: First Day of Camp, alongside an ensemble cast including Bradley Cooper, Amy Poehler and Elizabeth Banks, all reprising their roles from the 2001 film. In 2016, he appeared in the comedy-drama film The Fundamentals of Caring, alongside Selena Gomez, and lent his voice to the animated films The Little Prince and Sausage Party.

In 2003, Rudd married Julie Yaeger. They have two children: a son, Jack Sullivan (b. 2006) and a daughter, Darby (b. 2010).

The year 2004 marked the start of his work with director/producer Judd Apatow, first on the film Anchorman: The Legend of Ron Burgundy as Brian Fantana with Steve Carell, David Koechner and Will Ferrell, produced by Apatow and again in 2005 in The 40-Year-Old Virgin with Carell and Seth Rogen, directed by Apatow. He subsequently worked with Apatow in 2007's Knocked Up, as frustrated husband Pete, married to Leslie Mann's character. In that film, he co-starred with Jason Segel, Jonah Hill, Seth Rogen, and Jay Baruchel. Rudd appeared as John Lennon in the comedy film Walk Hard: The Dewey Cox Story in 2007 and as the drug-addled surf instructor in Nicholas Stoller's Forgetting Sarah Marshall in 2008 with Jason Segel and Jonah Hill, both of which Apatow produced. Rudd appeared as uncredited cameos in Year One (2009) and Bridesmaids (2011). In 2012, he starred and also co-produced with Apatow on the film Wanderlust with Jennifer Aniston. He starred in the comedy film This Is 40 with Leslie Mann, a spinoff from Knocked Up, which was directed and produced by Apatow. He reprised his role as Brian Fantana in the 2013 sequel Anchorman 2: The Legend Continues.

Rudd is a fan of MLB's Kansas City Royals and of the NFL's Kansas City Chiefs, for whom he narrated the 2007 season of HBO's Hard Knocks.

In 2009, Rudd again appeared with Jason Segel in I Love You Man where he and Segel play buddies who bond over their shared love for the rock band Rush. Both Rudd and Segel are themselves fans of the band. Also in 2009, Rudd co-created the TV series Party Down with John Embom, Rob Thomas and Dan Etheridge. He lent his voice to the DreamWorks computer-animated hit movie Monsters Vs. Aliens.

In 2010, Rudd reunited with Steve Carell for the first time since The 40-Year-Old Virgin for the Jay Roach-directed comedy Dinner for Schmucks. In 2012, he had a supporting role in the teen drama The Perks of Being a Wallflower, playing Mr. Anderson, a Teacher of Charlie, played by Logan Lerman. He starred in the 2011 comedy-drama film Our Idiot Brother with Elizabeth Banks, Zooey Deschanel, and Emily Mortimer. It was the fifth film that Rudd starred in with Elizabeth Banks. He had previously appeared with her in Wet Hot American Summer (2001), The Baxter (2005), The 40-Year-Old Virgin (2005) and Role Models (2008).

In 2012, Rudd appeared in the Broadway production of Craig Wright's Grace. The play was performed at the Cort Theatre. Starring alongside Rudd was Academy award nominee Michael Shannon, Kate Arrington, and seven-time Emmy award winner Ed Asner. The play was first acclaimed at the Woolly Mammoth Theatre in Washington, D.C. In 2004. It would then go on to receive equal praise at NorthLight Theatre in Chicago and then at the Pasadena Playhouse in LA, where it received three L.A. Drama Critics Circle Awards, including Best Play.

On December 19, 2013, Rudd was officially confirmed as cast in the 2015 Marvel film Ant-Man. He played lead character Scott Lang/Ant-Man, and also co-wrote the screenplay with Adam McKay. Rudd reprised his role in Captain America: Civil War (2016).

Rudd received a star on the Hollywood Walk of Fame on July 1, 2015. He unveiled the 2,554th star on the mile-long strip of plaques on Hollywood Boulevard. At the occasion Rudd said, "I remember being a kid and walking this boulevard and reading the names and thinking about what so many other millions of people thought about, which is, you know, 'Who's that?'"

Rudd is a supporter of the Stuttering Association for the Young (SAY), a nonprofit organization to help young people who stutter. He hosted the organization's 6th Annual All-Star Bowling Benefit on January 22, 2018. Rudd told Vanity Fair that he became an advocate for stuttering awareness after portraying a character who stutters in a play.