Thewlis, second of three children, was born in Blackpool, Lancashire, England, the son of Maureen (née Thewlis) and Alec Raymond Wheeler. Both of his parents worked at his father's shop, which sold toys in the summer and wallpaper and paint in the winter.

As a teenager, he played in a rock band called QED, in which he, Cliff Ashcroft and Chris Swift wrote much of their own music and lyrics. QED played at some of the Blackpool Hotels to earn money for equipment and their first recording session at Storm Studios in Blackpool.

Later, Thewlis played lead guitar with a punk-rock band called Door 66. As a musician he was "doing nicely, doing good" and did not want to be an actor. He enrolled in the Guildhall School of Music and Drama in London only because his friends did.

Thewlis graduated in 1984. When he went to register with the actors union, he intended to use Wheeler as his stage name, but a "David Wheeler" already existed. His mother's maiden name was the first that came to mind.

His first acting job was in a play entitled Buddy Holly at the Regal in Greenwich. Thewlis' first major film role was as the rambling street philosopher Johnny in Naked (1993; dir. Mike Leigh), for which he was named best actor by the National Society of Film Critics (United States), the London Film Critics Circle, the Evening Standard, the New York Film Critics Circle and the Cannes Film Festival.

Despite the dark nature of the film, he has been critically acclaimed for the role and it is seen as one of his best roles. The same year he appeared on television as the sexual predator James Jackson in Prime Suspect 3, opposite Helen Mirren and Ciaran Hinds. Prior to this Thewlis' first television appearance was alongside the Ken Jones in Valentine Park.

Through the 1990s, Thewlis appeared in a variety of films, mostly fantasy and period, including Restoration (1995), Black Beauty (1994), Total Eclipse (1995) with Leonardo DiCaprio, The Island of Dr. Moreau (1996), Dragonheart (1996), and Seven Years in Tibet (1997), opposite Brad Pitt (because of this film, Thewlis is barred from entering China).

He was nominated for a British Independent Film Award for Divorcing Jack (1998), and played Clov in a (2000) television film of Samuel Beckett's Endgame. Notable appearances also include Bernardo Bertolucci's Besieged (1998) and Paul McGuigan's Gangster No. 1 (2000), opposite Malcolm McDowell.

He auditioned for the role of Professor Quirrell in the film Harry Potter and the Philosopher's Stone, but the role was given to Ian Hart. Despite missing out for the first film, in 2004, he was cast as Remus Lupin in Harry Potter and the Prisoner of Azkaban.

Thewlis did not have to audition for the part as he was director Alfonso Cuarón's first choice for the role. He accepted it on advice from Ian Hart, who told him that Lupin was "the best part in the book." He reprised the role in the fifth film in the series, Harry Potter and the Order of the Phoenix, and will appear again in Harry Potter and the Half-Blood Prince. and in Harry Potter and the Deathly Hallows. He also appears in "The Boy in the Striped Pyjamas".

His acting talent also led him to a part in the Dinotopia movie as the villain, Cyrus Crabb.

Recent credits include Ridley Scott's Kingdom of Heaven (2005), Terrence Malick's The New World (2005) and The Omen (2006). As a director, he was nominated for a BAFTA for best short film for Hello, Hello, Hello (1995); he has also written, directed and starred in the feature Cheeky (2003).

When researching for his role in Kingdom of Heaven, Thewlis went to the Hospitaller museum near his home, and the first thing he saw was a mannequin wearing the exact same costume that he wore in the film.