Nesmith began his recording career in 1965, with a one-off single released on Edan Records. He followed this with two singles recorded under the name "Michael Blessing", released on Colpix Records - coincidentally also the label of Davy Jones, though they had not yet met. From 1965 to early 1970, both were members of the pop rock band The Monkees, created for the television situation comedy of the same name. The only Monkee to learn of the audition from the famous press advertisement (asking for "four insane boys"), Nesmith won his role largely by appearing blasé when he auditioned, as if he were considering the studio, and not the other way around. He further distinguished himself by carrying a bag of laundry to be done on the way home, and wearing a wool cap to keep his hair out of his eyes, riding his motorcycle to the audition. Producers Bob Rafelson and Bert Schneider remembered "Wool Hat", and called Nesmith back. Once he was cast, Screen Gems bought his songs from their publishers, so they could be used in the show.

As with the other Monkees, Nesmith came to be frustrated by the "manufactured image" and role imposed on them by the whole project, and wanted a bigger hand in matters. He was permitted to write and produce two songs per album, and his music was frequently featured in episodes of the series. However, Nesmith wanted a shot at making singles with the band - and to play on his own productions, which he had not been allowed to do. While the Monkees did succeed in ousting supervisor Don Kirshner (with Nesmith punching a hole in a wall, to make a point with Kirshner and attorney Herb Moelis), and took control of their records and song choices, sales dipped. The band never overcame the credibility problems they faced when word got out that they had not played on their first records. Nesmith also found Monkees concerts dissatisfying as a performer, with audiences made up largely of children and their parents who expected to hear their hits first and foremost.

Nesmith had fought hard to have his songs featured more prominently, and the Monkees to really play, but years later seemed to discount both: "I wasn't the only musician, and I wasn't much of a musician. What I was able to do was write tunes; I could just sort of pull them out of a hat." He particularly trashed the compilation More Greatest Hits of the Monkees as being "badly recorded, badly sung, marginally played, and they're weak tunes." He did not regret his Monkees days though, for the most part, continued to praise his bandmates (although not always getting along with them), and tended to like the fans that he met.

After leaving the group (his last Monkees commitment was a Kool-Aid commercial, early in 1970), Nesmith went on to record a number of critically acclaimed record albums. His first was with with the First National Band, then the Second National Band, and finally as a solo artist. His earlier albums had a distinctly country music feel to them, anticipating the "alt-country" movement of the 1990s, and included such hits as "Silver Moon" and the perennial favorite, "Joanne". His 1977 album, From A Radio Engine To The Photon Wing, included the song "Rio", for which he created a very influential music video. In the mid-70s he briefly collaborated as a songwriter with Linda Hargrove, resulting in the tune "I've Never Loved Anyone More," a hit for Lynn Anderson and recorded by many others, though Nesmith has yet to record the tune himself.

Exploring the world of video production further, he created a television program called Pop Clips for the Nickelodeon cable network. The concept was sold to Time Warner/Amex, who developed it into the MTV network. Nesmith won the first Grammy Award (1981) given for Video of the Year for his hour-long Elephant Parts and also had a short-lived series inspired by the video called "Television Parts". He founded a company, Pacific Arts Video, which was a pioneer in the home video market, producing and distributing a wide variety of videotaped programs. Pacific Arts eventually ceased operations after an acrimonious contract dispute with PBS over home video licensing rights and payments for several series, including Ken Burns' The Civil War. On February 3, 1999, a jury awarded Nesmith $46.8 million in compensatory and punitive damages, prompting his widely-quoted comment, "It's like finding your grandmother stealing your stereo. You're happy to get your stereo back, but it's sad to find out your grandmother is a thief." PBS appealed the ruling and a settlement was reached with the results kept confidential.

He was the executive producer for the movies Repo Man, Tapeheads, and Timerider, as well as his own solo recording and film projects. In 1998, Nesmith published his first novel, The Long Sandy Hair of Neftoon Zamora. His new album, Rays was released on April 4, 2006. This is his first album since his Grammy-nominated The Garden in 1994.

Since 1990, Nesmith has hosted the Council on Ideas, a gathering of intellectuals from different fields who are asked to brainstorm solutions to world problems.

Nesmith spent a decade as a board of trustees member and nominating member of the American Film Institute and is currently President and chairman of the board of trustees of the Gihon Foundation.