Born in Mountain View, Arkansas, Powell attended Little Rock College in Arkansas, before starting his entertainment career as a singer in his own band. He was signed by Warner Bros. in 1932 and made his film debut as a singing bandleader in Blessed Event. He went on to star as a boyish crooner in movie musicals such as 42nd Street (film), Footlight Parade, Gold Diggers of 1933, Dames, Flirtation Walk, and On the Avenue, often appearing opposite Ruby Keeler and Joan Blondell.

Powell desperately wanted to expand his range but Warner Bros. wouldn't let him. Finally, reaching his forties and knowing that his young romantic leading man days were behind him, he lobbied to play the lead in Double Indemnity. He lost out to Fred MacMurray, another Hollywood nice guy. MacMurray's success, however, fueled Powell's resolve to pursue projects with greater range and in 1944 he found himself cast in the first of a series of films noir this time as Private Detective Philip Marlowe in Murder, My Sweet, directed by Edward Dmytryk. The film was a big hit. Dick Powell had successfully reinvented himself as an actor.

The following year, Dmytryk and Powell re-teamed to make Cornered, a gripping, post-WWII thriller that helped define the film noir style.

He became a popular tough-guy lead, appearing in movies such as Johnny O'Clock and The Tall Target. Even when he appeared in lighter fare such as The Reformer and the Redhead and Mrs. Mike, he never sang in his later roles.

From 1949 until 1953 Powell played the lead role in the NBC radio theater production Richard Diamond, Private Detective. His character in the 30 minute weekly was a likeable private detective with a quick wit.

In the 1950s Powell produced and directed several B-movies and was one of the founders of Four Star Television, appearing in and supervising several shows for that company. His film "The Enemy Below" based on the novel by Denys Rayner won an academy award for special effects.

Powell died on January 2, 1963 from stomach cancer, aged 58. He was one of many of the cast and crew of the 1956 movie, The Conqueror, who died from the same disease. The Conqueror had been filmed in Utah near an atomic test site and it's been rumored, however never proven, that the film's shooting location may have been the cause of the cancers the crew were inflicted with.

He is buried at Forest Lawn Memorial Park in Glendale, California.