Paul McGann was born in Surrey, England in 1959 into a Roman Catholic family. His parents encouraged him and his siblings to develop their talents and gifts from an early age. McGann's talents were further developed when he attended grammar school in Liverpool.

One of McGann's teachers advised him to enter the Royal Academy of Dramatic Arts and to pursue a career as an actor. Acting on his teacher's advice, McGann enrolled at the Royal Academy and went on to enjoy a successful acting career spanning over two decades.

Paul McGann is the third of six children in the McGann family. His mother, Clare McGann, had twin boys, Joseph and John, who were born in 1957, but John died shortly after birth. Paul McGann has three younger siblings: Mark (born in 1961), Stephen (born in 1963) and Clare McGann (born in 1965).

All three of his brothers are also actors and the four of them starred together (as four brothers) in the 1995 television TV serial The Hanging Gale about the Irish Famine. They also formed the pop quartet The McGanns, releasing the single "Shame About the Boy". McGann's sister, Clare, is a programme finance manager for Five.

McGann's first major role was the infamous British deserter and criminal Percy Toplis in the 1986 BBC serial The Monocled Mutineer. The film was based on the 1978 book of the same name, which was written by William Alison and John Fairley.

Although McGann received praises for his dramatic performance, the drama was never re-broadcast on the BBC. This is because the BBC came under fire from the Conservative Government due to the sensitivity of the subject matter of the Étaples Mutiny at "The Bull Ring", a harsh British Army training ground in Étaples, France.

The events that transpired at the Bull Ring remain debated, and documents concerning the occurrences there will remain sealed until 2017. They claimed that the film was inaccurate and displayed a "Left-wing bias". Toplis was a mysterious figure and the film, as well as the book, depicted him as an active participant of the Etaples Mutiny, before he was tracked down and killed some years after the end of World War I.

As a result, a minor political crisis in Britain was launched which prompted the BBC to remove all planned repeat screenings of the film. Despite the banning controversy, The Monocled Mutineer was released by the BBC on video in the early 1990s, and on DVD in 2007.

Following on from that part of Percy Toplis, McGann sought a less controversial and more comedic role for his next project. In 1986, he was cast as the eponymous "I" in Bruce Robinson's cult film comedy, Withnail and I. He also starred as Anton Skrebensky in Ken Russell's 1989 adaptation of D. H. Lawrence's The Rainbow. McGann's other early film appearances include The Monk, Dealers, Tree of Hands and the epic war film Empire of the Sun.

Since 1989, McGann has concentrated primarily on television work, including Nice Town and Nature Boy for the BBC, and The One That Got Away and the second series of Hornblower for ITV. However, he has had small roles in a number of high-profile American films like The Three Musketeers and Alien³. His role in Alien³ was originally larger, but much of it was edited out of the final print. The cut footage can be seen in the extended version of the film.

In 1993 he was cast as Richard Sharpe, the lead character in the Sharpe series of made-for-tv movies based on Bernard Cornwell's novels, however he injured his knee while playing football just days into filming Sharpe's Rifles in the Ukraine. He was replaced by Sean Bean and the role effectively kick-started Bean's career and is the one that he is most closely identified with. McGann's injury led to what was at the time the largest insurance settlement in British television history, a sum of £2,128,172.