Thewlis studied at the Guildhall School of Drama in London. His first major film role was as the rambling street philosopher Johnny in Naked (1993; dir. Mike Leigh), for which he was named best actor by the New York Film Critics Circle, the National Society of Film Critics (United States), the London Critics Circle, the Evening Standard, and the Cannes Film Festival. The same year he appeared on television as the sexual predator James Jackson in Prime Suspect 3, opposite Helen Mirren and Ciaran Hinds.

Through the 1990s, Thewlis appeared in a variety of films, mostly fantasy and period, including Restoration (1995), Total Eclipse (1995) with Leonardo DiCaprio, Dragonheart (1996), and Seven Years in Tibet (1997), opposite Brad Pitt (because of this film, Thewlis is barred from entering China). He was nominated for a British Independent Film Award for Divorcing Jack (1998), and played Clov in a (2000) television film of Samuel Beckett's Endgame. Notable appearances also include Bernardo Bertolucci's Besieged (1998) and Paul McGuigan's Gangster No. 1 (2000), opposite Malcolm McDowell.

In 2004 he starred as Remus Lupin in Harry Potter and the Prisoner of Azkaban (dir. Alfonso Cuaron) a role he is expected to reprise in the further films in the series Harry Potter and the Order of the Phoenix. Recent credits include Ridley Scott's Kingdom of Heaven (2005), and Terrence Malick's The New World (2005).

As a director, he was nominated for a BAFTA for best short film for Hello, Hello, Hello (1995); he has also written, directed and starred in the feature Cheeky (2003).

Thewlis was born in in Blackpool, Lancashire. In 1992, he married director Sara Sugarman; they divorced in 1993. He is currently living with the actress Anna Friel. Their daughter Gracie was born on 9 July 2005 in London.