In 1992, Mendes was named artistic director of the Donmar Warehouse, one of London's leading nonprofit studio theaters and what would become the breeding ground for some of the most exciting productions to appear on the British stage. One of his first projects in his new capacity was "Assassins", Stephen Sondheim's unusual musical about the personalities responsible for the murders of US presidents. While his work at the Donmar was extensive (including "Richard III"), the director did not work there exclusively. His 1993 effort "The Tempest" was produced by the Royal Shakespeare Company while his 1994 staging of Harold Pinter's "The Birthday Party" played at the Lyttleton Theatre for the National Theatre Company. That same year, his "Oliver!" debuted at the London Palladium, and four years later earned the distinction of having the longest run of any show produced at that theater.

Mendes moved away from musicals briefly with an inspired 1996 take on the Tennessee Williams classic "The Glass Menagerie". This Donmar production relied more on the original text, including the scenic specifications, than the many legendary past productions had, with Mendes casting actors closer to the age of Williams' characters. He elicited fine work from Claire Skinner as Laura, Ben Chaplin as Tom and especially Zoe Wanamaker as Amanda, resulting in a more contemporary, less literal take on the play that made for a particularly moving theatrical experience while underlining the original's timelessness. The successful 1995 revival of Sondheim's "Company" met with largely positive notices, and Mendes broke new ground by casting the impressive Adrian Lester in the lead role, marking the first time a black actor starred in a Sondheim musical. The director updated George Furth's original book, changing this look at 1970 New York society, marriage and relationships to a present day examination of the same. He followed up with another American musical, this time an original entitled "The Fix", a darkly comedic look at modern politics, that met with somewhat mixed reviews. Many critics found its exploration of image versus ideas in late 20th century United States unevenly staged with heavy-handed delivery.

Mendes' revival of Kander & Ebb's "Cabaret" debuted at the Donmar Warehouse in 1994, starring Alan Cumming as the Emcee and Jane Horrocks as Sally Bowles. The daring environmental production was seedier and more unsettling than the legendary Broadway run starring Joel Grey (who reprised his role in the 1972 film). Mendes made his Broadway directing debut in 1998 when the production was reprised, winning most major theater awards in its premiere season and subsequently enjoying a long run. The production, performed in a space meant to recreate the atmosphere of a real Berlin cabaret was at once grand and claustrophobic, giving even those familiar with the play the feeling that anything could happen. Mendes and fellow stager Rob Marshall (who also choreographed) stressed the dimensionality of the characters and their situations, making them both likable and abhorrent, resulting in less cartoonish and more frighteningly realistic portrayals of the political and social unrest of the time. Theatergoers flocked to see the critically acclaimed musical even after its Tony-winning stars Natasha Richardson and Alan Cumming departed the production. The director had another New York success when his overwhelmingly acclaimed "Othello" had a limited run at the Brooklyn Academy of Music. Mendes' returned to Broadway with "The Blue Room", an adaptation of "La Ronde" penned by David Hare. The play, originally produced at the Donmar Warehouse, received a great deal of press in Britain over a brief nude scene by co-star Nicole Kidman. New York audiences were less impressed, finding the play to be well-paced and skillfully directed but lacking the punch that would warrant the surrounding hype.

Movie audiences were treated to Mendes' work in 1999 when he made his cinematic debut with "American Beauty", a brave and moving darkly comedic look at a man (Kevin Spacey) in the midst of a self-destructive mid-life crisis, and the effect it has on his relationship with his controlling wife (Annette Bening) and teenaged daughter (Thora Birch). Mendes' assured debut earned him numerous accolades including a Best Director Oscar.

Mendes next project was the lofty and somber "Road to Perdition" starring Tom Hanks with Jude Law and Paul Newman both giving excellent supporting roles. It was the story of a son and father's journey after the father's connection to the Irish mafia caused his wife and other son to be killed. While the appearance of the film and the acting of the leads was praised, many critics felt Mendes's directing to be somewhat self-conscious and hollow. But while "Perdition" was not fully embraced by moviegoers, Mendes continued to be a considerable force on the legitimate stage in 2002 and 2003, directing heralded London productions of Shakespeare's "Twelfth Night" and Chekov's "Uncle Vanya" which later went to Broadway, and collecting an unprecedented trio of prestigious Lawrence Olivier Awards (the British equivalent of Broadways' Tonys) in the same year, for Best Director, Best Revival and a special achievement award for his 10-year-tenure with London's tiny Donmar Warehouse Theater. He also helmed a 2003 Broadway revival of "Gypsy" starring Benadette Peters, and his production of "Take Me Out" earned Mendes a second Tony Award for Best Revival of a Play.

When he returned to directing for the big screen, it was with the ambitious "Jarhead" (2005) based on author and real-life ex-U.S. Marine Anthony Swofford's bestselling remembrance of his tour of duty during the 1990 Gulf War. Mendes' Brit background allowed him to craft the source material into an unbiased, unflinching, highly psychological tour of the mind of a young American solider (Jake Gyllenhaal) who is highly trained for war but finds himself battling boredom, paranoia and existential issues as he and his fellow troops waits to finally engage the enemy. The movie cannily, purposely and ironically evoked several other war-themed films--including Francis Ford Coppola's "Apocalypse Now" and Michael Cimino's "The Deer Hunter" literally, and Kubrik's "Full Metal Jacket" thematically--and stood comfortably alongside those admired efforts as a mature, thoughtful exploration of military life--but without being an expressly anti-war statement. The film was also Mendes' first without his frequent cinematographer Conrad Hall following Hall's death, but the director found a perfect successor with the acclaimed Roger Deakins, who filmed the Iraqi desert as an increasingly hallucinatory landscape as the film progressed.