Shandling was born to a Jewish American family in Chicago, Illinois and attended the University of Arizona, at first majoring in electrical engineering, but eventually completing a degree in marketing and pursuing a year of post-graduate studies in creative writing.

In 1973, Shandling moved to Los Angeles, made contact with George Carlin after catching one of his shows, worked at an ad agency for a time, then sold a script to the writers on what was then one of the hottest shows on network television, the NBC sitcom Sanford and Son. Shandling's script became "Sanford and the Rising Son," the episode in which Ah Chew (played by Pat Morita) turned Fred Sanford's house into a Chinese restaurant (broadcast in November 1975). After his Sanford and Son success, Shandling got more work, writing numerous scripts for other hit sitcoms of the time, including Welcome Back, Kotter and Three's Company.

Shandling made a good living at sitcom writing, but decided after some time that the limitations of the genre were restricting his creativity. In 1977, he was involved in a car accident which put him in critical condition for weeks, but, characteristically, after recovering, Shandling turned the accident into part of his stand-up act.

Shandling performed his first stand-up routine at the Comedy Store in Los Angeles. His shtick was the persona of an anxiety-ridden, grimacing, guarded, confused man who seemed always on the verge of losing control. After a couple of years on the road, a talent scout from The Tonight Show caught his act and booked him to appear as a guest host on March 18, 1981. Shandling began substituting for Johnny Carson on a regular basis. Joan Rivers was expected to take over as Carson's "permanent" guest host when Carson decided to spend more time off-air, but Rivers decided instead to go head-to-head against The Tonight Show in her own talk show on the Fox network in June 1986. As a result, Shandling became the "permanent" Monday night guest host of The Tonight Show before Jay Leno took over the reins of the show.

Shandling went on to create It's Garry Shandling's Show in 1985 (with co-writer Alan Zweibel, a former writer for Saturday Night Live) and The Larry Sanders Show in 1992. Both shows were hits with TV critics and with the viewing public. The first show ran on Showtime from 1986 to 1990 (episodes of the show also ran on Fox starting in 1988), the second on HBO from 1992 to 1998. In 1993, NBC offered Shandling $5 million to take over Late Night after David Letterman made his highly publicized move to CBS, but Shandling turned the deal down, instead choosing to spoof on his own show the network's scramble to find a Letterman replacement.

Shandling's shows are now considered pioneers of the "breaking the fourth wall" concept, in which characters turn away from the action and comment directly on the proceedings or make asides to the audience. The breakdown of the fourth wall was used by comedians like George Burns in the 1950s, but Shandling took the idea to new levels of intensity and frequency, and the conceit now is a regular feature of sitcoms like The Bernie Mac Show.

Shandling was the host of The Grammy Awards from 1990 to 1995 and the Emmy Awards in 2000 and 2004.

Shandling was immortalized in the Butthole Surfers song "Revolution, Pt. 2" on their album Pioughd. During the end of the song his name is chanted repeatedly.

His new film, the animated "Over the Hedge," will be released in May 2006.