Born in Vienna, of assimilated Jewish ancestry, he worked with Max Reinhardt before emigrating to America. At first he directed and acted for 20th Century Fox, his Austrian accent typecasting him as a screen Nazi, despite his Jewish background.

After the war, he became well known as a Hollywood directors in the 1950s and early 1960s — delivering films that were well received by critics such as Andrew Sarris.

The bald-headed Preminger was known to fulfill the stereotype of the demanding Teutonic terror, in the vein of directors such as Erich von Stroheim and Fritz Lang. He was well-respected by some, but was often antagonistic towards his actors: Dyan Cannon once commented that she didn't think "he was capable of directing his nephew to the bathroom." Nonetheless, he was credited with helping break down the ingrained Catholic censorship then controlling motion pictures by dint of his demands, creativity and control.

Notable films include Anatomy of a Murder with James Stewart and Ben Gazzara, Advise and Consent with an on-form Charles Laughton, and Bonjour Tristesse with David Niven and Deborah Kerr. He also acted in a few movies; his most notable role is that of the warden of a German POW camp in Stalag 17.

In the 1960s Batman television series, Preminger was one of three actors who played Mr. Freeze. Adam West who portrayed Batman recalls Preminger as incredibly rude and unpleasant, and that all members of the cast were secretly delighted when he was subsequently pursued for unpaid dues by the Screen Actors Guild.

Ingo Preminger, who produced the 1970 M*A*S*H* movie, is Otto Preminger's brother.

Through an extramarital relationship with Gypsy Rose Lee he had one child, writer and screenwriter Erik Lee Preminger.

During his marriage, he engaged in an affair with Dorothy Dandridge, who wanted him to leave his wife and marry her.

Otto Preminger died in 1986, aged 79, of cancer and Alzheimer's disease, and was interred in the Woodlawn Cemetery, The Bronx, New York.