The son of an executive of Carnation Company, Baitz had a peripatetic childhood, living with his family in Brazil, South Africa and California. After graduating from Beverly Hills High School, he worked at various jobs such as an assistant to two producers (which he used as the basis for his first play "Zilinsky/Mizlansky") and a clerk in a bookstore. His first two-act play, "The Film Society", about the staff of a prep school in South Africa, demonstrated a skill and maturity that belied his youth. Its 1987 success in L.A. led to an off-Broadway production featuring Nathan Lane the following year. By 1992 when he had two successful off-Broadway productions, "The End of the Day", starring Roger Rees, and "The Substance of Fire", with Ron Rifkin and Sarah Jessica Parker, Baitz's position as, in the words of The New York Times critic Frank Rich, "a mature artist with a complete vision" was solidified. Four years later, he found himself as one of the three finalists for the 1996 Pulitzer Prize for his semi-autobiographical "A Fair Country".

With his success in theater well-established, Baitz began to branch into other media. He wrote and directed the two character play "Three Hotels" (widely believed to be based on his parents) for a 1991 PBS presentation of "American Playhouse". [Baitz later reworked the material for the stage under the same title.] For the Showtime anthology series "Fallen Angels", he adapted a Jim Thompson story "The Frightening Frammis" which also marked the directorial debut of actor Tom Cruise. Filmmaker Henry Jaglom cast him as a gay playwright who achieved success at an early age, a role that was hardly a stretch for Baitz, in the Chekhovian "Last Summer in the Hamptons" (1995). The darkly handsome Baitz more than held his own in a cast that included Viveca Lindfors (in her final screen role), Victoria Foyt, Andre Gregory and Melissa Leo. He furthered ventured into features in 1996 as both screenwriter and producer of the film version of his play "The Substance of Fire".