McShane was born in Blackburn, Lancashire, on 29 September 1942, the son of Irene (née Cowley) and footballer Harry McShane. His father was Scottish and his mother, who was born in England, was of Irish and English descent. McShane grew up in Urmston, Lancashire, and attended Stretford Grammar School. He studied at the Royal Academy of Dramatic Art and was still a student there when he appeared in his first film, 1962's The Wild and the Willing.
In Britain, McShane's best-known role may be that of antiques dealer Lovejoy in the hit BBC drama series of the same name. He also enjoyed fame in the United States as English cad Don Lockwood in the soap opera Dallas and as an English cockfighting aficionado in the miniseries Roots. Even before Lovejoy, McShane was a pin-up as a result of appearances in television series such asWuthering Heights (1967, as Heathcliff), If It's Tuesday, This Must Be Belgium (1969, as Charlie), Jesus of Nazareth (1977, as Judas Iscariot), and Disraeli (1978) — as well as films like Sky West and Crooked (1965) and Battle of Britain (1969).
In the United States, he is perhaps best known for the role of historical figure Al Swearengen in the HBO series Deadwood, for which he won the 2005 Golden Globe Award for Best Actor in a Television Drama. He was also nominated for at the 2005 Emmy Award and Screen Actors Guild Awards.
Within the science fiction community, McShane is best known for playing the character Robert Bryson, Ph.D. in Babylon 5: The River of Souls.
In 2000, he appeared as the mobster Teddy Bass in the film Sexy Beast, terrifying audiences with his sociopathic demeanor.
In 1985, he appeared as an iconic MC on Grace Jones' Slave to the Rhythm, a concept album which featured his narration interspersed throughout, and which sold over a million copies worldwide.
Other recent roles include Captain Hook in Shrek the Third, Iofur Raknison (known as Ragnar Sturlusson in the film) in The Golden Compass, Tai Lung in Kung Fu Panda (for which he received an Annie Award nomination), and Mr. Bobinsky, the strange Russian neighbor in Coraline. In live-action, he has performed in the comedy Hot Rod, the action/thriller Death Race, and The Seeker. He has appeared on the NBC television drama series The West Wing as a Russian diplomat.
During 2007–08, he starred as Max in the 40th anniversary Broadway revival of Harold Pinter's The Homecoming, co-starring Eve Best, Raúl Esparza and Michael McKean, and directed by Daniel Sullivan, at the Cort Theatre (16 December 2007 to 13 April 2008).
In 2009, McShane appeared on the short-lived NBC television drama series Kings, which was based on the biblical story of David. His portrayal of King Silas Benjamin, an analogue of King Saul, was highly praised, with one critic saying, "Whenever Kings seems to falter, McShane appears to put bite marks all over the scenery."
In 2010, McShane starred in the miniseries The Pillars of the Earth as Bishop Waleran Bigod. The series was a historical drama set in 12th century England and adapted from Ken Follett's novel of the same name.
Also in 2010, the Walt Disney Company confirmed that McShane would play Blackbeard in the fourth installment of the Pirates of the Caribbean franchise, On Stranger Tides. In 2013, McShane played King Brahmwell in Bryan Singer's Jack the Giant Slayer.
Since 2010, McShane has narrated the opening teases for each round of ESPN's coverage of The Open Championship.