McGrath made his film acting debut in a small role in "Ironweed" (1987) and then made his professional stage debut in the 1988 Off-Broadway play "Dalton's Back" at the Circle Repertory Company (CRC). He dropped out of college to concentrate on his burgeoning career which included a co-starring role in the CRC production "Amulets Against the Dragon Forces" (1989) and roles in the busted pilot "Appearances" (NBC, 1990) and "Pump Up the Volume" (1990).
McGrath earned praise for his 1991 stage turns as a troubled teen in "Life During Wartime" and an AIDS-stricken young man in "The Old Boy". He made his Broadway debut opposite Jessica Lange as the young collector who shares a scene with Blanche Du Bois in "A Streetcar Named Desire" in 1992 and that same year offered a chilling performance as a drug addict accused of killing his stepfather in the based-on-fact NBC miniseries "Cruel Doubt". He rounded out the year with a supporting turn in Tim Robbins' political satire "Bob Roberts".
For the next several years, McGrath concentrated on stage work, winning notice co-starring with Samuel L Jackson and Mykelti Williamson in the West Coast premiere of "Distant Fires" in 1994. He made a sympathetic if creepy serial killer in Nicky Silver's black comedy "Living in Captivity" (1995) and was the authorial stand-in in Jon Robin Baitz's semi-autobiographical "A Fair Country" in 1996. McGrath resumed his film career with a supporting part in the film version of Baitz's play "The Substance of Fire" in 1996. The following year, he co-starred in the little-seen "Colin Fitz", playing the younger of two cops assigned to guard a rock star's grave. McGrath had the relatively brief role of Jarvis, the prospective bridegroom, in "The Member of the Wedding" (USA Network, 1997) and reprised his stage role in the gay-themed short "The Dadshuttle" (1997).
Stanley Tucci tapped the actor for the comic role of an Italian detective on board of ship of fools in the contemporary screwball comedy "The Impostors" (1998). McGrath shone as the supportive cousin of Hilary Swank's Brandon in the superior drama "Boys Don't Cry" (1999). He went on to single-handedly rescue the Off-Broadway hit "Hedwig and the Angry Inch" later that year when he replaced a miscast Ally Sheedy in the title role of the German transsexual rock singer. The show had already been earmarked to close but after McGrath earned raves (particularly from The New York Times), "Hedwig" remained opened for several more months. The actor went on to offer a fine turn as a gay graduate student with commitment issues in the ensemble film "The Broken Hearts Club: A Romantic Comedy" (2000). His career also received a boost when he was tapped as a replacement as the Emcee in the hit revival of "Cabaret" in the fall of 2000. He was next seen on the big screen as the college chum of a novelist (played by co-writer and co-director Alan Cumming) in "The Anniversary Party" (2001).