Born Nicholas Kim Coppola in Long Beach, California to August Coppola, an Italian American writer and professor, and Joy Vogelsang, a dancer of part German descent. In 1974 he got to meet H.B 'Toby' Halicki at the Rosecrans Car Wash while Halicki was filming Gone in 60 Seconds. In 1976, Cage's parents divorced and he moved to Beverly Hills with his father. He is the nephew of both Francis Ford Coppola and Talia Shire, making him first cousins with directors Sofia Coppola and Roman Coppola, as well as with actor Jason Schwartzmann.

Cage became passionate about acting at an early age, which became so much that he left high school early, got his GED, and went to pursue his career. Cage changed his name early in order to try to make his own way in acting without benefiting from his uncle's reputation. He chose the name Cage after the Marvel comic book hero Luke Cage, Power Man and avant-garde composer John Cage.

He had a small role in Fast Times at Ridgemont High (1982) (credited under the Coppola name), most of which ended on the cutting room floor. His next notable roles were in the 1983 movies Rumble Fish and Valley Girl, which was his breakout role.

He won an Academy Award for Best Actor for his role in Leaving Las Vegas (1995). He has developed a reputation for alternating roles in action movies with more serious character-driven dramas, as well as the occasional dark humor. His most recent appearances were in Lord of War as a charismatic arms dealer and The Weather Man as a depressed celebrity weather man. In 2000 he got to do a remake of Halicki's film with the production of Gone In 60 Seconds.

He has a son, Weston Coppola Cage (born 1990), by model Kristina Fulton. On April 8, 1995 he married actress Patricia Arquette, whom he divorced on May 18, 2001. On August 10, 2002 he married Lisa Marie Presley and filed for divorce less than four months later. They divorced on May 16, 2004. He married former waitress Alice Kim on July 30, 2004, in a private ceremony in northern California. He has another son (named after DC hero Superman), Kal-el Coppola Cage (born October 3, 2005 in New York City), by Kim.

He was instrumental in helping Johnny Depp's acting career, whom Cage befriended while Depp was still trying to get his foot in the door. Cage arranged for his agent to meet with Depp.

He also is a big fan of comic books, with his favorite character being Marvel Comics' Ghost Rider, a carnival motorcyclist bent on revenge. He has been attached for a movie adaptation for years, and eventually landed the role of Johnny Blaze, Ghost Rider's alter ego. The Ghost Rider movie is slated for release in 2007.