Matthew Macfadyen was born in Norfolk and attended schools in England, Scotland, and Indonesia. He went to boarding school in Rutland before being accepted to the renowned Royal Academy of Dramatic Art at age 17.

After having studied at the RADA from 1992 to 1995, Macfadyen quickly became a well-known actor in British theatre due primarily to his work with the stage company Cheek by Jowl, for whom he played Antonio in The Duchess of Malfi, Charles Surface in The School for Scandal, and Benedick in Much Ado About Nothing. His Benedick was particularly memorable, played as an officer-class buffoon with a moustache and a braying laugh. In 2005, he played to further great acclaim the part of Prince Hal in Henry IV, Parts One and Two at the Royal National Theatre, with Michael Gambon in the lead. In 2007, he returned to the stage, portraying an American, Clay, a stay at home father with a liberal attitude in the play The Pain and the Itch.

Macfadyen's major TV breakthrough came when he appeared as Hareton Earnshaw in a television adaptation of the Emily Brontë novel Wuthering Heights, screened on the ITV network in 1998. Further television drama work followed, including starring roles in the dramas Warriors (1999) and The Way We Live Now (2001), both for the BBC. Also in 2001, he earned much critical acclaim for his starring role in the BBC Two drama serial Perfect Strangers, which was written and directed by Stephen Poliakoff. In 2002, he starred in The Project, a BBC drama charting New Labour's rise to power, and he took his highest-profile role to date, when he was picked to star in Spooks, which went on to become a huge popular and critical success when screened on BBC One. A longer second season was screened in 2003, and a third season was broadcast in the autumn of 2004, with him leaving the series in the second episode. The series also found a following on cable television in the United States, where it aired as MI-5 on the A&E Network. In 2007 he appeared in the one-off Channel 4 drama Secret Life, which dealt with the controversial subject of paedophilia. Matthew was nominated and subsequently won the 'Best Actor' award at the Royal Television Society 2007 Awards for this part, and has been nominated for a BAFTA. He also appeared in a short sketch for Comic Relief as the groom in Mr Bean's Wedding, alongside Rowan Atkinson and Michelle Ryan

Macfadyen has appeared in several films including Enigma (released in 2001), in which he was cast as a battle-scarred submarine commander, and In My Father's Den, for which he received the New Zealand Screen Award for Best Actor. Most notably, he stars as the romantic lead Fitzwilliam Darcy in a highly acclaimed adaptation of Pride and Prejudice, released in the UK in September 2005. He stars in Frank Oz's Death at a Funeral with Rupert Graves, Alan Tudyk, Daisy Donovan and Keeley Hawes Matthew also stars in Incendiary, which is based on Chris Cleave's novel about a woman whose life is torn apart when her husband and infant son are killed in a suicide bombing at a soccer match whilst she was committing adultery. He plays a senior anti-terrorist police officer alongside Michelle Williamsand Ewan McGregor.

In 2002, he began a relationship with his Spooks co-star Keeley Hawes They were subsequently married on 8 October 2004. Their first child, daughter Maggie, was born in December 2004. The couple announced the birth of a baby boy, Ralph, in September 2006.