D'Onofrio was born in the Bensonhurst neighborhood of Brooklyn, New York City. He is of Italian descent, with ancestors from Sicily. His parents, Gennaro (Gene) D'Onofrio, an interior designer and theater-production assistant, and Phyllis, a server and restaurant manager, met while Gene was stationed in Hawaii with the U.S. Air Force. In 1956, they had their first child, Antoinette. She was followed by Elizabeth (1957), now an Actress and drama coach residing in Fort Myers Beach, Florida, then by Vincent. He was raised in Hawaii and Colorado in his younger years.

After graduating from high school, D'Onofrio started to appear in front of the curtain. During an 18-month stint at the University of Colorado in Boulder, Colorado, he was involved with small, community-theater productions. He later studied method acting at the American Stanislavsky Theater and the Actors Studio, under coaches Sonia Moore and Sharon Chatten, which landed him his first paid role in off-Broadway's This Property Is Condemned. He went on to appear in a number of their productions, including Of Mice and Men and Sexual Perversity in Chicago. D'Onofrio continued his career by performing in many New York University student productions while also working as a bouncer at the Hard Rock Cafe, a bodyguard for Robert Plant and Yul Brynner and a deliveryman. In 1984, he made his Broadway debut as Nick Rizzoli in Open Admissions. In 2012, D'Onofrio returned to teach at the Lee Strasberg Theatre and Film Institute where his daughter is a student.

In 1986, D'Onofrio took on the role often considered the defining moment in his acting career, as Pvt. Leonard Lawrence, an overweight, clumsy Marine recruit in the movie Full Metal Jacket. On a tip from friend Matthew Modine, D'Onofrio was urged to send audition tapes to Director Stanley Kubrick, in England. Four tapes later, D'Onofrio landed the role. Originally, the character of Pvt. Lawrence had been written as a "skinny ignorant redneck"; however, Kubrick believed the role would have more impact if the character were big and clumsy. D'Onofrio gained 70 lb (32 kg) for the role, bringing his weight to 280 lb (130 kg). This remains the record for most weight gained by an actor for a movie, surpassing Robert De Niro's accumulation of 60 lb (27 kg) for the filming of Raging Bull (1980). While filming an obstacle course scene for the movie, D'Onofrio injured his left knee, compounded by the excessive weight, which required surgical reconstruction.

After filming of Full Metal Jacket was completed, having lost nearly all the weight gained for the movie in just nine months, D'Onofrio went on to play Dawson, the owner of Dawson's Garage in Adventures in Babysitting (1987). D'Onofrio appears in only one scene near the end of the film, but his small role attracted attention because of his sexy physique (in complete contrast to the overweight character he played in Full Metal Jacket) and long blond hair (a wig) which causes Sara, the film's youngest character, to mistakenly believe he is the Norse God Thor, the comic-book superhero she idolizes. In 1988, D'Onofrio was cast in another supporting role in the film Mystic Pizza, playing the fiancé of Lili Taylor's character. In the movie, which was Julia Roberts' breakout film, he was billed under his full name Vincent Phillip D'Onofrio.

In the early 1990s, D'Onofrio was in a relationship with Actress Greta Scacchi, with whom he starred in several films during that period (including The Player and Fires Within). The couple had one daughter, Leila (born 1992).

In 1992, he appeared in Robert Altman's The Player, as an aspiring Screenwriter. In 1997, he made a move to television and received an Emmy nomination for his appearance as John Lange in the Homicide: Life on the Street episode "Subway." In 1999, he turned down a role in The Sopranos. D'Onofrio portrayed leftist radical Abbie Hoffman in Steal This Movie in 2000, also starring Janeane Garofalo as his wife.

D'Onofrio continued to play a wide variety of minor or supporting roles, including the father of a saint in Nancy Savoca's Household Saints (1993), Director Orson Welles in Tim Burton's Ed Wood (1994), farmer Edgar and the evil "Bug" that possesses him from Men in Black (1997), Yippie founder Abbie Hoffman in Steal This Movie! (2000), a man who claims to be from the Future in Happy Accidents (2000), and the serial killer Carl Stargher, opposite Jennifer Lopez's character in The Cell (2000).

D'Onofrio has also had success behind the camera, producing The Whole Wide World (1996) and Guy (1997), and executive producing The Velocity of Gary (1998) and Steal This Movie (2000).

On March 22, 1997, D'Onofrio married Dutch model Carin van der Donk, and the couple had a son (born 1999). The couple split in the early 2000s, but reconciled and had a second son (born 2008).

In 1998, D'Onofrio, with his father Gene and sister Elizabeth, founded the RiverRun International Film Festival in Winston-Salem, North Carolina. In 2003, former film Producer and dean of the School of Filmmaking at the University of North Carolina School of the Arts, Dale Pollock, took over the festival and moved it from Brevard, North Carolina, to Winston-Salem. Annually, the festival showcases the best films offered from the independent and international industry, as well as those from student filmmakers.

In 2003, it was reported that D'Onofrio and Joe Pantoliano had begun work on a small film titled Little Victories, about a 12-year-old boy whose perceptions of the world are forever changed when his gangster uncle comes to live with him. According to a television interview with Pantoliano, the film was not completed and went into turnaround because of a failure to raise the funds necessary for production.

On November 10, 2004, D'Onofrio collapsed on the set of Law & Order: Criminal Intent. He collapsed again at home a few days later, and after further testing, was diagnosed with exhaustion. The cause of his exhaustion was explained later as his 14-hour days filming Criminal Intent, coupled with the filming of his short film Five Minutes, Mr. Welles during the show's hiatus.

In 2005, he directed and starred in the short film Five Minutes, Mr. Welles (2005), which represented a culmination of D'Onofrio's Desire to improve on his performance as Welles in Ed Wood, which in spite of D'Onofrio's striking physical resemblance to the actor and Director, reportedly left Director Tim Burton underwhelmed. Burton decided to procure the services of voiceover Artist Maurice LaMarche due to being known for his excellent imitation of Welles' voice to produce a more dramatically effective rendering of the character's dialogue. Disappointed with his performance, having been given only two weeks notice to prepare for the role, D'Onofrio wrote, produced, directed, and starred in the short in answer to the critics and himself. The film depicts D'Onofrio as Welles preparing for his role in The Third Man.

In 2008, alongside his sister, Toni, D'Onofrio began hosting events to raise money for the Utah Meth Cops Project. He served as the project's spokesperson from 2009–2012.

On October 27, 2009, D'Onofrio made his musical debut, appearing in character as comedic country singer George Geronimo Gerkie at Joe's Pub in New York City. He appeared as Gerkie again at New York's Hammerstein Ballroom on December 6, 2009, during Matt Pinfield's Holiday Extravaganza Show and at the premiere of his movie Don't Go in the Woods at Joe's Pub on May 28, 2010. A fourth concert was held at the pub on July 22, 2010, with proceeds from the event going to the Utah Meth Cops project.

In February 2011, D'Onofrio became a public face of the gun control debate, appearing in an ad by the Citizens Crime Commission of New York City urging a ban on large-capacity ammunition magazines.

During an interview in January 2012, D'Onofrio discussed his frustration with conflicting reports on his current marital status, including inaccuracies on Internet Movie Database. He has stated that, despite some reports, he is currently married. His family and he reside in a townhouse in the Gramercy Park neighborhood of Manhattan.

In 2013, D'Onofrio co-starred in the movie Escape Plan, filmed in New Orleans, also starring Sylvester Stallone, Arnold Schwarzenegger, and 50 Cent. D'Onofrio portrayed Lester Clark, deputy Director of the Prisons Bureau.

In 2014, D'Onofrio released two songs as part of an avant garde spoken-word project with multi-instrumentalist and Composer Dana Lyn. The first single, "I'm a Hamster", gathered attention on social media. The full album was made available for purchase in March, 2015, on the band's website.

He also portrayed Vic Hoskins in the action adventure film Jurassic World (2015). He played Jack Horne in Antoine Fuqua's 2016 remake of The Magnificent Seven.