The son of a singer and a bank manager, Daldry spent part of his formative years as a member of a youth drama group in Taunton, England. While at Sheffield University, he excelled at dramatics and after an apprenticeship with Italian clown Elder Milletti, began his theatrical career in earnest. Daldry served an apprenticeship at the Crucible Theatre in Sheffield from 1985 to 1988. His initial directorial work was in repertory before he joined The Gate Theatre where he garnered attention for his work on "Damned for Despair" in 1991.

Daldry moved to the National and immediately served notice as one to watch with an acclaimed deconstructionist staging of J B Priestley's "An Inspector Calls". The collaboration with designer Ian McNeill yielded a highly stylized approach to what was considered a heavy-handed drama about a family's involvement in a young woman's suicide. The curtain opened to an onstage rainstorm, shrill air raid sirens and a dollhouse-like main setting that by play's end resulted in a brilliant coup de theatre. Daldry picked up numerous accolades for his staging including a Tony Award when the production transferred to Broadway in 1994.

Continuing to work at the Royal Court Theatre where he served as artistic director from 1992 to 1995, he guided Fiona Shaw in an acclaimed revival of "Machinal" (1994) and directed "Rat in the Skull" (1995), with Tony Doyle and Rufus Sewell. In 1997, Daldry signed a three-year, first look deal with Working Title Films, anticipating his move to film. He worked on the 1998 BAFTA-nominated short "Eight" before returning to the theater to direct David Hare's monologue "Via Dolorosa", about Hare's trip to the Middle East. Playwright Lee Hall showed Daldry his screenplay about a youngster from a coal mining family who wants to be a ballet dancer instead of a miner. Hooked by the writing and the story, Daldry selected the project as his debut film "Billy Elliot" (originally called "Dancer"). For his follow-up, the director attracted top-drawer talent like Meryl Streep, Julianne Moore and Ed Harris as co-stars in his powerful, emotional film version of Michael Cunningham's Pulitzer-winning "The Hours" (2002). Telling three loosely inter-related stories about author Virginia Woolf, a Los Angeles housewife and a middle-aged lesbian coping with the terminal illness of her best male friend, the film allowed its leading ladies to shine and transitioned nimbly and cleverly between the three storylines and historical eras without feeling forced or gimmicky. Daldry's skill with both his actresses and his storytelling techinque was recognized with a wealth of critical accolades and awards nods, including an Academy Award nomination as Best Director.