Phantom Thread, set during the London fashion industry in 1954, was released in late 2017. It starred Daniel Day-Lewis in his first acting role since Lincoln in 2012 and is also reportedly Day-Lewis's final performance in a film, following four decades in the profession. The cast also includes Lesley Manville, Vicky Krieps and Richard Graham. In September 2016, the U.S. distribution rights were acquired by Focus Features, with Universal handling international distribution. Principal photography began in January 2017. Cinematographer Robert Elswit was unavailable during the production, and despite claims of Anderson acting as his own Cinematographer on the film, there is no official credit.

Anderson was born June 26, 1970, in Studio City, California, to Edwina (née Gough) and Ernie Anderson. Ernie was an actor who was the voice of ABC and a Cleveland television late-night horror movie host known as "Ghoulardi" (after whom Anderson later named his production company). Anderson grew up in the San Fernando Valley. He is third youngest of nine children, and had a troubled relationship with his mother but was close with his father, who encouraged him to become a Writer or Director. Anderson attended a number of schools, including Buckley in Sherman Oaks, John Thomas Dye School, Campbell Hall School, Cushing Academy and Montclair Prep.

Anderson was involved in filmmaking from a young age and never really had an alternative plan to directing films. He made his first film when he was eight years old and started making movies on a Betamax video camera which his dad bought in 1982 when he was twelve years old. He later started using 8 mm film but realized that video was easier. He began writing in adolescence, and at 17 years old he began experimenting with a Bolex sixteen millimeter camera. After years of experimenting with "standard fare", he wrote and filmed his first real production as a senior in high school at Montclair Prep using money he earned cleaning cages at a pet store. The film was a thirty-minute mockumentary shot on video called The Dirk Diggler Story (1988), about a pornography star; the story was inspired by John Holmes, who also served as a major inspiration for Boogie Nights.

Anderson dated (and frequently collaborated with) singer Fiona Apple during the late 1990s and early 2000s. He has been in a relationship with Actress and Comedian Maya Rudolph since 2001. They live together in the San Fernando Valley with their daughters Pearl Minnie (born October 2005), Lucille (born November 2009), and Minnie Ida (born August 2013), and son Jack (born July 2011).

For $20,000, made up of gambling winnings, his girlfriend's credit card, and money his father set aside for him for college, Anderson made Cigarettes & Coffee (1993), a short film connecting multiple story lines with a twenty-dollar bill. The film was screened at the 1993 Sundance Festival Shorts Program. He decided to expand the film into a feature-length film and was subsequently invited to the 1994 Sundance Feature Film Program. At the Sundance Feature Film Program, Michael Caton-Jones served as Anderson's mentor; he saw Anderson as someone with "talent and a fully formed creative voice but not much hands-on experience" and gave him some hard and practical lessons.

While at the Sundance Feature Film Program, Anderson already had a deal with Rysher Entertainment to direct his first full-length feature, Sydney, retitled Hard Eight (1996). Upon completion of the film, Rysher re-edited it. Anderson, who still had the workprint of his original cut, submitted the film to the 1996 Cannes Film Festival, where it was accepted and screened in the Un Certain Regard section. Anderson was able to get his version released but only after he retitled the film, and raised the $200,000 necessary to finish it; Anderson and stars Philip Baker Hall, Gwyneth Paltrow and John C. Reilly contributed the funding. The version that was released was Anderson's and the acclaim from the film launched his career. Its story concerns three people: Syndey Brown (Hall), an experienced gambler who takes John Finnegan (Reilly) under his wing, while John becomes romantically involved with a troubled waitress (Paltrow). The film also featured Philip Seymour Hoffman as an arrogant gambler, beginning a five-film collaboration between the pair. In his review of the film, Chicago Sun-Times critic Roger Ebert wrote, "Movies like Hard Eight remind me of what original, compelling characters the movies can sometimes give us."

Anderson began working on the script for his next feature film during his troubles with Hard Eight, completing the script in 1995. The result was Anderson's breakout for the drama film Boogie Nights (1997), which is based on his short film The Dirk Diggler Story and is primarily set in the Golden Age of Porn. The film follows a nightclub dishwasher (Mark Wahlberg), who becomes a popular pornographic actor under his stage name Dirk Diggler. The script was noticed by New Line Cinema's President, Michael De Luca, who felt "totally gaga" reading it. It was released on October 10, 1997 and was a critical and commercial success. The film revived the career of Burt Reynolds, and provided breakout roles for Wahlberg and Julianne Moore. After the film's production, Reynolds refused to star in Anderson's next film Magnolia. At the 70th Academy Awards ceremony, the film was nominated for three Academy Awards, including for Best Supporting Actor (Burt Reynolds), Best Supporting Actress (Julianne Moore) and Best Original Screenplay.

After the success of Boogie Nights, New Line told Anderson that he could do whatever he wanted for his next film and granted him creative control. Though Anderson initially wanted to make a film that was "intimate and small-scale", the script "kept blossoming". The resulting film was the ensemble piece Magnolia (1999), which tells the story of the peculiar interaction of several individuals in the San Fernando Valley. Anderson used the music of Aimee Mann as a basis and inspiration for the film, commissioning her to write eight new songs. At the 72nd Academy Awards, Magnolia received three nominations, for Best Actor in a Supporting Role (Tom Cruise), Best Original Song for "Save Me" by Aimee Mann and Best Original Screenplay. Anderson stated after the film's release that "what I really feel is that Magnolia is, for better or worse, the best movie I'll ever make."

In 2000, Anderson wrote and directed a segment for Saturday Night Live with Ben Affleck, "SNL FANatic", based on the MTV series FANatic. Anderson was a standby Director during the 2005 filming of Robert Altman's A Prairie Home Companion for insurance purposes, as Altman was 80 years old at the time. In 2008, Anderson co-wrote and directed a 70-minute play at the Largo Theatre, comprising a series of vignettes starring Maya Rudolph and Fred Armisen, with a live score by Jon Brion.

Anderson has been called "one of the most exciting talents to come along in years" and "among the supreme talents of today." After the release of Boogie Nights and Magnolia, Anderson was praised as a wunderkind. In his 2002 interview with Jan Aghed, the Director Ingmar Bergman referenced Magnolia as an Example of the strength of American cinema. In 2004, Anderson was ranked twenty-first on The Guardian's list of the forty best living filmmakers. In 2007, Total Film named him the twentieth greatest Director of all time and the American Film Institute regarded him as "one of American film's modern masters." In 2012, The Guardian ranked him number one on its list of "The 23 Best Film Directors in the World," writing "his dedication to his craft has intensified, with his disdain for PR and Celebrity marking him out as the most devout filmmaker of his generation." In 2013, Entertainment Weekly named him the eighth-greatest working Director, calling him "one of the most dynamic Directors to emerge in the last 20 years." In a podcast interview with critic Elvis Mitchell, Director Sam Mendes referred to Anderson as "a true auteur – and there are very few of those who I would classify as geniuses", and Ben Affleck in his acceptance speech for the Golden Globe Award for Best Director said "Paul Thomas Anderson, who I think is like Orson Welles." Peter Travers of Rolling Stone wrote that "The Master, the sixth film from the 42-year-old writer-director, affirms his position as the foremost filmmaking talent of his generation. Anderson is a rock star, the Artist who knows no limits." As of 2016, Anderson is the only person to win all three Director prizes from the three major international film festivals (Cannes, Berlin, Venice).

There Will Be Blood (2007) was loosely based on the Upton Sinclair novel Oil!. It follows Daniel Plainview, a ruthless silver miner exploiting the Southern California oil boom of the late 19th and early 20th centuries. The budget of the film was $25 million, and it earned $76.1 million worldwide. Daniel Day-Lewis starred and won an Oscar for Best Leading Actor for his role. The film received eight nominations overall at the 80th Academy Awards. Paul Dano received a BAFTA nomination for Best Supporting Actor. Anderson was nominated for Best Director from the Directors Guild of America. The film also received eight Academy Award nominations, tying with No Country for Old Men for the most nominations that year. Anderson received nominations for Best Picture, Best Director and Best Adapted Screenplay, losing all three to the Coen Brothers for No Country for Old Men. There Will Be Blood was regarded by some critics as one of the greatest films of the decade, some parties further declaring it one of the most accomplished American films of the modern era; David Denby of The New Yorker wrote "the young writer-director Paul Thomas Anderson has now done work that bears comparison to the greatest achievements of Griffith and Ford", while Richard Schickel proclaimed it "one of the most wholly original American movies ever made". In 2017, New York Times film critics A. O. Scott and Manohla Dargis named it the "Best Film of the 21st Century So Far".

Production of Anderson's adaptation of Thomas Pynchon's 2009 novel Inherent Vice began in May 2013 and ended in August of the same year. The film marked the first time that Pynchon allowed his work to be adapted for the screen and saw Anderson work with Phoenix for a second time. The supporting cast includes Owen Wilson, Reese Witherspoon, Jena Malone, Martin Short, Benicio Del Toro, Katherine Waterston, Josh Brolin, Peter McRobbie, Michael K. Williams and Eric Roberts. Following its year-end release in December 2014, the film received two nominations at the 87th Academy Awards: Anderson for Best Adapted Screenplay and Mark Bridges for Best Costume Design.

In December 2009, Anderson was working on a new script tentatively titled The Master, about a "charismatic intellectual" who starts a new religion in the 1950s. An associate of Anderson stated that the idea for the film had been in Anderson's head for about twelve years. The Master was released on September 14, 2012 by The Weinstein Company in the United States and Canada to critical acclaim. The film stars Joaquin Phoenix as Freddie Quell, an alcoholic World War II veteran who meets Lancaster Dodd, played by Philip Seymour Hoffman, a leader of a religious movement known as "The Cause". Though the film makes no reference to the movement, it has "long been widely assumed to be based on Scientology." The Master received three nominations at the 85th Academy Awards: Joaquin Phoenix for Best Leading Actor, Philip Seymour Hoffman for Best Supporting Actor and Amy Adams for Best Supporting Actress.

Anderson frequently collaborates with many actors and crew, carrying them over from film to film. Anderson has referred to his regular actors as "my little rep company" that has included John C. Reilly, Philip Baker Hall, Julianne Moore, william H. Macy, Melora Walters, and most prominently, the late Philip Seymour Hoffman. Luis Guzmán is also considered Anderson's regular. Hoffman acted in Anderson's first four films as well as The Master. Except for Paul F. Tompkins, Kevin Breznahan and Jim Meskimen, who all had equally minor roles in Magnolia, There Will Be Blood had an entirely new cast. Anderson is one of three Directors – the others being Jim Sheridan and Martin Scorsese – with whom Daniel Day-Lewis has collaborated more than once. Robert Elswit has been Cinematographer for all of Anderson's films except The Master, which was shot by Mihai Mălaimare Jr. and Phantom Thread which has no credited Cinematographer. Jon Brion served as Composer for Hard Eight, Magnolia and Punch-Drunk Love, and Jonny Greenwood of Radiohead for every film since. Dylan Tichenor edited Boogie Nights, Magnolia, There Will Be Blood, and Phantom Thread. Anderson also regularly works with producing partners, JoAnne Sellar, Scott Rudin, Michael De Luca and Daniel Lupi, as well as casting Director Cassandra Kulukundis.

In 2015, Anderson directed Junun, a 54-minute documentary about the making of the album of the same name by Jonny Greenwood, Israeli Composer Shye Ben Tzur, and a group of Indian Musicians. Most of the performances were recorded at the 15th-century Mehrangarh Fort in the Indian state of Rajasthan. Junun premiered at the 2015 New York Film Festival.

Throughout his career, Anderson has also directed numerous music videos, usually for artists who he has also collaborated on films with, including Fiona Apple, Radiohead, HAIM, Joanna Newsom, Aimee Mann, Jon Brion, and Michael Penn. Jonny Greenwood of Radiohead, Mann, Brion and Penn have scored or contributed music to his films, while Newsom acted in Inherent Vice. Anderson directed a short film for HAIM in 2017, Valentine, featuring three musical performances from the band.