Ian Bannen was born in Airdrie, North Lanarkshire, Scotland, the son of a lawyer. Bannen served in the army and attended Ratcliffe College, Leicestershire. His first acting role came in a 1947 Dublin production of Armlet of Jade. He became a successful figure on the London stage, making a name for himself in the plays of both Shakespeare and 'Eugene O'Neill'. He was an original member of the Royal Shakespeare Company and appeared on Broadway as well.

His film debut occurred in the mid-1950s with a small role in Pool of London (1951), and he quickly rose to prominence, primarily in a wide range of supporting roles. During the early stages of his career he worked with the Boulting Brothers on Private's Progress and Carlton-Browne of the F.O. He enlivened scores of fine films in Britain and America. His performance as "Crow" in The Flight of the Phoenix (1965) won him an Oscar nomination as Best Supporting Actor, thus becoming the first Scottish actor to receive this honour. Thirty years and scores of films later, Bannen was given the Lifetime Achievement Award of the British Academy of Film and Television Arts.

His notable television appearances include Doctor Finlay, Thriller, and Tinker, Tailor, Soldier, Spy.

Bannen turned down the lead roles in Hawaii Five-0 and Van Der Valk.

Long after his leading man days had passed, he won new acclaim for his role as the touchingly crafty villager in Waking Ned (1998). The following year he died in a car accident, at Knockies Straight, near Loch Ness, aged 71.

He was survived by his wife, Marilyn Salisbury, whom he had married in 1976; they had no children.