Northam was born in Cambridge, the son of Rachel, a potter and professor of economics, and John Northam, a professor of literature and theatre, as well as Ibsen specialist and teacher first at Clare College, Cambridge and later at Bristol.

Northam was educated at Bristol Grammar School and Royal Holloway, University of London, and trained at the Bristol Old Vic Theatre School.

Northam performed at the Royal National Theatre - he replaced Daniel Day Lewis in the role of Hamlet (1989) and won the Olivier Award in 1990 for "most promising newcomer" for his performance in The Vosey Inheritance.

He made his American film debut in The Net (1995), but has appeared frequently in British films such as Carrington (1995), Emma (1996), The Winslow Boy (1999), An Ideal Husband (1999), Enigma (2001) and as Welsh actor and singer Ivor Novello in Gosford Park (2001). In 2002 he starred in the film Cypher alongside Lucy Liu.