After his parents' divorce, Connolly and his younger sister lived with his father and two aunts. He was considered odd by his schoolmates, as he had developed the habit of visiting graveyards. Despite initially being a good student, Connolly lost interest in school and dropped out at 15. A period of work as a delivery boy for a bookstore and a bread baker was followed by a five-year apprenticeship as a shipyard welder. He spent a brief tour building an oil rig off the coast of Nigeria before returning home. Connolly drifted into music as a banjo and guitar player in various venues in and around Glasgow. After working in several bands, he and Tam Harvey formed the folk duo The Humblebums, which expanded into a trio when Gerry Rafferty joined. Between songs, Connolly began to tell jokes, becoming an instant hit. Harvey eventually left the group, and Connolly and Rafferty continued to perform together until 1971 when the former set out on a solo career, performing comedy and music in clubs, mainly in Scotland and the North Country. His routines tended to look at how absurd life can be for the common folk. Always full of surprises, he spent a season with the King Theatre in Glasgow, then released an album and had the Number One hit song in the UK in 1975, "D.I.V.O.R.C.E.".

That same year, Connolly became notorious after telling a slightly off-color joke involving murder and a bare bottom on the British interview show "Parkinson". He made his screen debut in "Big Banana Feet" (1975), a film version of his comedy tour of Ireland. Connolly continued to build on his reputation as a comic and was even tapped to open for Elton John on his 1976 American concert tour. After a disastrous appearance in Australia, the comedian returned to the UK and launched "The Billy Connolly Extravaganza", an intense three-month concert booking throughout Britain. He branched out in 1977 with his first play "An' Me Wi' a Bad Leg", which met with less than stellar reviews. Subsequent unsuccessful attempts as a playwright convinced Connolly to concentrate his talents on what he did best.

By 1978, he took a one-time complete turn from stand-up comedy and barroom musical performances to appear in the Scottish Opera production of "Die Fledermaus". At the decade's end, Connolly was fully established on the British comedy-music scene and decided to move into features. After the limited 1979 release of "Absolution", which starred Richard Burton (not released in the USA until 1988), Connolly co-wrote and appeared with the creme of British comedy in a concert for Amnesty International which was filmed as "The Secret Policeman's Ball" (1981). Connolly was then asked to participate in the prestigious Edinburgh Festival in 1979. He wrote a play for the Festival, "The Red Runner," which was performed to packed houses and continued its run after the Festival closed. By 1982, his album "Pick of Billy Connolly," went gold almost immediately and by the mid-80s, he was firmly established as a screen presence in such British features as "Bullshot" (1985) and "Water" (1986), both directed by Dick Clement and little-seen outside the UK.

When the Fox Network aired "Freedomfest: Nelson Mandela's 70th Birthday Celebration" in 1988, Connolly was a virtual unknown in the United States, but his performance caught the attention of producers and interest in him grew. He was brought to the USA by HBO in 1990, and performed in "Whoopi Goldberg and Billy Connolly in Performance", a special produced at the Brooklyn Academy of Music in which Goldberg "introduced" Connolly. When Howard Hesseman left the successful ABC sitcom "Head of the Class" that same year, the network used the Scotsman as a replacement. Connolly was brought in as an Oxford-educated teacher well able to handle the genius-level students in the special high school group. The show lasted another season and half to diminishing ratings, but there was some complaint from the audience that Connolly's accent was too thick for the American ear. The comic headlined his own 1991 HBO special "Billy Connolly: Pale Blue Scottish Person" and followed with the short-lived ABC sitcom "Billy" (1992), in which he was a college instructor who marries one of his students in order to remain in America. After the demise of the series, Connolly's American profile receded. He played an auction emcee in "Indecent Proposal" (1993) and voiced the Scottish settler for Disney's animated "Pocahontas" (1995).

Returning to Scotland, he played the title role of a an Edinburgh rake in "Deacon Brode" (1996), which went virtually unseen in the USA. But the following year, he scored a triumph as the hunting servant who brings Queen Victoria (Judi Dench) out of her depression after the death of Prince Albert in "Mrs. Brown". With the film's rave reviews on both sides of the Atlantic, Connolly, now in his 50s, had arrived as an actor.

Connolly continued to work steadily thereafter, turning in fine performances in many films, perhaps most notably for actor-director Stanley Tucci in 1998's "The Impostors." In 2002 he appeared in another highly visible role, playing the recipient of Michelle Pfeiffer's poisonous wrath in "White Oleander," to be followed by even more mainstream exposure in 2003's "Timeline," director Richard Donner's lackluster adaptation of the Michael Crichton bestseller, and a more winning turn as Tom Cruise's loyal junior officer in "The Last Samurai" (2003). After popping up as himself in “Overnight” (2004), a documentary depicting the rags-to-riches-to-rags story of screenwriter Troy Duffy, Connolly appeared as Uncle Monty in “Lemony Snipet’s A Series of Unfortunate Events”, the Jim Carrey vehicle adapted from the popular series of children’s books.