Born Rasmus Karl Therkelsen Gottlieb in Copenhagen, Denmark to a theatrical family, Dane first appeared on stage at the age of 14. He came to Hollywood during World War I, and was immediately put to work in several anti-German propaganda films. Later, his tall, gangly appearance and wide grin made him perfect for comedic roles. His most memorable work, however, didn't come until 1925, when he signed a contract with Metro-Goldwyn-Mayer.

His first film at MGM was The Big Parade, directed by King Vidor and starring John Gilbert and Renée Adorée. The movie went on to become one of the highest grossing silent films in cinema history, and Dane’s role as a tobacco chewing doughboy proved to be his big break. Dane went on to appear as the comic relief in several high-profile costume dramas, including The Scarlet Letter (directed by Victor Sjöström and starring Lillian Gish), La Boheme (again directed by Vidor, and starring Gish, Gilbert and Adorée), and The Son of the Sheik (starring Rudolph Valentino). Dane also teamed up with fellow comedian George K. Arthur for a series of popular short films.

When sound films hit the theaters, Dane’s thick accent made it impossible for him to find work. Although friends such as Buster Keaton found small roles for him in their movies, by 1933, his career as an actor was over. Dane attempted to earn a living as a carpenter and mechanic, but eventually he was reduced to running a hot dog stand. His marriage to actress Thais Valdemar also collapsed around this time. Dane became deeply depressed, and committed suicide by shooting himself in his rented room in the Fairfax District.

He was laid to rest in Hollywood Forever Cemetery, and was posthumously honored with a star on the Hollywood Walk of Fame.