After returning from studying at Clongowes Wood College in the Republic of Ireland, Walsh attended the University of Rhode Island, where he starred in many college theater productions. In 1974, he was discovered by a director and began working in off-Broadway shows. He had intended to go by his real initials, but at a casting call, his name was misread as J.T. Walsh, and he realized he liked JT better than JP.

Walsh did not start doing feature films until 1983, where he had a minor role in Eddy Macon's Run. Over the next 15 years, he played in over 50 feature films, increasingly taking the bad guy role for which he is so well known, e.g. the loudly irascible Sgt. Maj. Dickerson in Good Morning, Vietnam. In his last year, he starred in Hidden Agenda, Pleasantville, and The Negotiator. All three of those movies were dedicated to his memory, after he died from a heart attack on February 27, 1998. In addition, Jack Nicholson dedicated his Academy Award for As Good as It Gets to the memory of Walsh, with whom he had starred in A Few Good Men in 1992. The 1997 thriller Breakdown featured Walsh as the villainous truck driver, which raised his profile to movie audiences. Sadly, it was said that Walsh wanted to show his range as an actor and play good guy parts, which proved slim, although the actor did get to play but a few decent people like the White House Chief of Staff in Outbreak in an inspired cameo, and Chester Van Damme in Sniper but even those roles had Walsh putting an amoral streak within his characters. Walsh played a member of Majestic-12 in the 1996-1997 sci-fi/drama television series Dark Skies.

J.T. Walsh, father of actor John West, was the inspiration for Fametracker's The J.T. Walsh Memorial "Hey! It's That Guy!" feature on character actors.