Walsh began his entertainment career as a stage actor in New York City, quickly progressing into film acting. In 1914 he became assistant to D.W. Griffith and made his first full-length feature film The Life of General Villa in the same year after actually riding with Pancho Villa in Mexico, followed by the newly-revisited and critically-acclaimed Regeneration in 1915, possibly the earliest gangster film. Walsh played Lincoln's murderer in Griffith's towering classic The Birth of a Nation (1915), often cited by critics (along with Citizen Kane) as the greatest movie ever made. Walsh enjoyed success as a director with the innovative and spectacular The Thief of Bagdad in 1924 starring Douglas Fairbanks and Anna May Wong. In the early days of sound with Fox Walsh directed the Western In Old Arizona in 1929 after having to give up the leading role of the Cisco Kid when a jackrabbit jumped through a windshield and cost Walsh an eye. Walsh also directed the first widescreen spectacle The Big Trail in 1930, a wagon train western shot on location across the West and starring then unknown John Wayne, whom Walsh discovered as prop boy Marion Morrison and renamed after Revolutionary War general Mad Anthony Wayne (Walsh happened to be reading a book about General Wayne at the time). Walsh directed The Bowery in 1933, featuring Wallace Beery, George Raft, Fay Wray, and Pert Kelton; the movie recounts the story of Steve Brodie, the first man to supposedly jump off the Brooklyn Bridge and live to brag about it. A not too-distinguished period followed with Paramount Pictures from 1935 to 1939 but Walsh's career rose to new heights soon after moving to Warner Brothers with The Roaring Twenties (1939) with James Cagney and Humphrey Bogart, Dark Command (1940) with John Wayne and Roy Rogers, High Sierra (1941) with Ida Lupino and Humphrey Bogart, They Died With Their Boots On (1941) with Errol Flynn as Custer, and White Heat (1949) with James Cagney. His contract at Warners expired in 1953, after which he directed several films, including two with Clark Gable, The Tall Men (1955) and The King and Four Queens (1956). Walsh retired in 1964.

A founding member of the Academy of Motion Picture Arts and Sciences (AMPAS), Walsh lost an eye in a car accident while working on the film In Old Arizona in 1929. He was the brother of silent screen actor George Walsh.

Among his better known works are:

The Life of General Villa (1914), directorial debut Regeneration (1915) Evangeline (1919) The Thief of Bagdad (1924), produced by and starring Douglas Fairbanks What Price Glory? (1926), his most successful silent movie Sadie Thompson (1928), in which he acted alongside Gloria Swanson In Old Arizona (1929) with Warner Baxter as the Cisco Kid The Big Trail (1930) with John Wayne; first movie in widescreen Klondike Annie (1936), starring Mae West The Roaring Twenties (1939) with James Cagney and Humphrey Bogart Dark Command (1940) with John Wayne and Roy Rogers They Drive by Night (1940) with George Raft and Humphrey Bogart High Sierra (1941) with Ida Lupino and Humphrey Bogart They Died with Their Boots On (1941) Desperate Journey (1942) Northern Pursuit (1943) Pursued (1947), starring Robert Mitchum White Heat (1949), with James Cagney Colorado Territory (1949), a remake of High Sierra Captain Horatio Hornblower (1951) Distant Drums (1951), remarkable for its innovative sound effects Blackbeard the Pirate (1952) The Tall Men (1955) with Clark Gable and Jane Russell The King and Four Queens (1956) with Clark Gable and Eleanor Parker Esther and the King (1960) Marines, Let's Go (1961) A Distant Trumpet (1964), final film. He also unofficially co-directed Humphrey Bogart's The Enforcer in 1951.