Richards attended the California Institute of the Arts but received a BFA degree in drama from The Evergreen State College in 1975 (he also had a short-lived Improv act with Ed Begley, Jr. during this period).

Enrolled in the Los Angeles Valley College, he continued to dominate student productions. He later said, "I am grateful that the public schools introduced me to the performing arts." He was drafted during the Vietnam war and stationed in Germany as one of the co-directors of the V Corps Training Road Show. He produced and directed shows dealing with race relations and drug abuse; "This was a successful, educational operation, boosting the morale of our men and incorporating the arts into the service." He then spent two years in the Army developing educational skits and a couple more years "finding himself" at a commune in the Santa Clara Mountains; he drove a bus and developed a stand-up comedy act in 1979. He got his big break nine months later appearing in Billy Crystal's first cable TV special. He married a former casting director (married 19 years, divorced in 1990), a union that produced his daughter, Sophia, and now lives in the San Fernando Valley.

Richards began as one of the cast members on ABC's Fridays television show (including a famous instance in which guest Andy Kaufman refused to deliver his scripted lines, leading Richards to bring the cue cards on screen to Kaufman, before a small riot ensued.) He made several guest appearances with Jay Leno as an accident-prone fitness expert, and gained a screen credit portraying "Stanley Spadowski" in "Weird Al" Yankovic's movie UHF in 1989.

In the same year, he was cast as Cosmo Kramer (based on real-life counterpart Kenny Kramer) in the television series Seinfeld, which was created by fellow Fridays cast member Larry David and comedian Jerry Seinfeld. The show quickly went on to become one of the most popular sitcoms in television history.

In 2000, Richards began work on a new series for NBC, his first major project since Seinfeld's high-profile finale. The Michael Richards Show was originally conceived as a comedy/mystery, but the first pilot fared poorly with test audiences. NBC ordered that the show be retooled into a more conventional, office-based sitcom before its premiere. After a few weeks of poor ratings and negative reviews, it was cancelled and is now part of the Seinfeld Curse.

Richards was also slated to star in the USA series Monk, but pulled out of the project, which later starred Tony Shalhoub.

Richards also played a cameo role in So I Married an Axe Murderer where he was an "insensitive man," and had a supporting role as an escaped convict in the John Ritter movie Problem Child.