Peter Seamus O'Toole was born in 1932, with some sources giving his birthplace as Connemara, County Galway, Ireland, and others as Leeds, in West Yorkshire, England, where he also grew up. O'Toole himself is not certain of his birthplace or date, noting in his autobiography that while he accepts August 2 as his birthdate, he has conflicting birth certificates in both countries, with the Irish one giving a June, 1932 birthdate.

O'Toole is the son of Constance Jane (née Ferguson), a Scottish-born nurse, and Patrick Joseph O'Toole, an Irish metal plater, football player and racetrack bookmaker. When O'Toole was one year old, the O’Tooles began a five-year tour of major racetrack towns in northern England.

Peter O'Toole was evacuated from Leeds early in World War II and went to a Catholic School for seven or eight years, where he was "implored" to become right-handed. “I used to be scared stiff of the nuns: their whole denial of womanhood, the black dresses and the shaving of the hair, was so horrible, so terrifying,” he later commented. “Of course, that's all been stopped. They're sipping gin and tonic in the Dublin pubs now, and a couple of them flashed their pretty ankles at me just the other day.”

Upon leaving school O'Toole obtained employment as a trainee journalist and photographer on a provincial newspaper until he was called up for National Service as a signaller in the Royal Navy. As reported in a radio interview in 2006 on NPR, he was asked by an officer whether he had something he'd always wanted to do. His reply was that he'd always wanted to try being either a poet or an actor.

O'Toole attended the Royal Academy of Dramatic Art (RADA) (1952–1954) on a scholarship after being rejected by the Abbey Theatre's Drama School in Dublin by the then director Ernest Blythe, because he couldn't speak Irish. At RADA, he was in the same class as Albert Finney, Alan Bates and Brian Bedford. O'Toole described this as "the most remarkable class the academy ever had, though we weren't reckoned for much at the time. We were all considered dotty".

O'Toole began working in the theatre, gaining recognition as a Shakespearean actor at the Bristol Old Vic and with the English Stage Company, before making his television debut in 1954 and a very minor film debut in 1959. O'Toole's major break came when he was chosen to play T. E. Lawrence in David Lean's Lawrence of Arabia (1962), after Marlon Brando proved unavailable and Albert Finney turned down the role.

His performance was ranked number one in Premiere magazine's list of the 100 Greatest Performances of All Time. The role introduced him to U.S. audiences and earned him the first of his eight nominations for the Academy Award for Best Actor.

O'Toole is also one of a handful of actors to be Oscar-nominated for playing the same role in two different films; he played King Henry II in both 1964's Becket and 1968's The Lion in Winter. O'Toole played Hamlet under Laurence Olivier's direction in the premiere production of the Royal National Theatre in 1963.

He has also appeared in Sean O'Casey's Juno and the Paycock at Gaiety Theatre, Dublin, fulfilling a lifetime ambition when taking to the stage of the Irish capital's Abbey Theatre in 1970 to play in Waiting for Godot by Samuel Beckett, alongside the stage actor Donal McCann.

His 1980 performance as Macbeth is often considered one of the greatest disasters in theatre history, but he has redeemed his theatrical reputation with his performances as John Tanner in Man and Superman and Henry Higgins in Pygmalion, and won a Laurence Olivier Award for his performance in Jeffrey Bernard is Unwell (1989).

O'Toole won an Emmy Award for his role in the 1999 mini-series Joan of Arc. In 2004, O'Toole played King Priam in the summer blockbuster Troy. In 2005, he appeared on television as the older version of legendary 18th century Italian adventurer Giacomo Casanova in the BBC drama serial Casanova.

O'Toole's role was mainly to frame the drama, telling the story of his life to serving maid Edith (Rose Byrne). The younger Casanova seen for most of the action was played by David Tennant, who had to wear contact lenses to match his brown eyes to O'Toole's blue.

He was once again nominated for the Best Actor Academy Award for his portrayal of Maurice in the 2006 film Venus, directed by Roger Michell, his eighth such nomination. Most recently, O'Toole co-stars in the Pixar animated film, Ratatouille, an animated film about a rat with dreams of becoming the greatest chef in Paris.

O'Toole has recently starred in the second season of Showtime's hit drama series The Tudors in which he portrays Pope Paul III, who excommunicates King Henry VIII from the church. That leads to a showdown between the two men in seven of the ten episodes.