Goodman went to Affton High School. He won an athletics scholarship to play football at Southwest Missouri State University as a teenager, but subsequently decided to become an actor, leaving Missouri for New York in 1975. He then appeared on stage off-Broadway, in dinner theatres and on TV advertisements before playing character parts in movies in the early 1980s.

Goodman is best known for comic roles, including Roseanne Barr's husband in the TV sitcom Roseanne, the voice of Sulley in Monsters, Inc., and Fred Flintstone in the movie The Flintstones. He has appeared in many roles in movies by The Coen Brothers. Goodman is frequently cast as blue-collar characters or as the best friend of the lead character, for example in Sea of Love, as Al Pacino's police partner, The Big Lebowski's best friend, the disgruntled Vietnam vet Walter, and Fallen, as police partner to Denzel Washington. Standing 6 ft 2 in (1.88 m) and weighing nearly 400 lb (180 kg), Goodman had to lose weight in order to play Babe Ruth in the 1992 movie The Babe.

In 2000, Goodman had his own short-lived sitcom called Normal, Ohio, in which he played an atypical gay man who returns to his small hometown to start a new life. Although the show projected a positive message for homosexuals, viewers did not respond well and critics panned the show. In 2004, he starred alongside Jean Smart in the CBS sitcom Center of the Universe; it, too, was critically panned and quickly cancelled.

Goodman has also been a popular guest host a number of times on NBC's Saturday Night Live. Goodman also has a recurring role on The West Wing, as fictional former House Speaker Glen Allen Walken, briefly becoming President when President of the United States Josiah Bartlet yielded power temporarily under the terms of the 25th Amendment to the United States Constitution. He also played someone who unexpectedly became a head of state in the film King Ralph, after the ruling family of the United Kingdom dies in a freak electrical accident.

John Goodman has a star on the St. Louis Walk of Fame.