After several early television roles, including The Henderson Kids alongside Kylie Minogue, he attracted notice in his breakout film, The Year My Voice Broke (1987), and won the Australian Film Institute Award for Best Supporting Actor. His next major role was in The Big Steal (1990), and Spotswood (1992), co-starring with Anthony Hopkins; this was followed in 1994 by Metal Skin and in 1996 by Cosi and Idiot Box. In 2000, he was in two contrasting films, the Australian Mullet and the Hollywood Vertical Limit.

In 2005, he was preparing to play Mark Antony in the Sydney Theatre Company-produced Julius Caesar, and he was in the Terrence Malick-directed film The New World.

Mendelsohn starred in the second (2005) and third (2006) season of the TV series Love My Way and in 2008, he appeared in Baz Luhrmann’s Australia. He starred in the first season of the Melbourne TV series Tangle, which premiered on Showcase in 2009. In 2009, he appeared in the American science fiction film Knowing directed by Alex Proyas. The same year, Mendelsohn starred as Ned in Beautiful Kate, directed by Rachel Ward, opposite Bryan Brown and Rachel Griffiths.

In October 2009, he was featured in an episode of the Australian series Who Do You Think You Are?, which traced the ancestry of his paternal grandfather Oscar Mendelsohn, who was from a Jewish family. It also found convicts on his mother’s side. Searching for a connection to composer Felix Mendelssohn, which was eventually dismissed, he discovered links to 19th-century Prussia. His paternal ancestors were among the first Prussian Jews to be naturalised in Schneidemühl in the province of Posen, now Piła in modern Poland. He also has Greek, German, and British Isles ancestry.

In 2010, he appeared in Animal Kingdom, starring in the film as Andrew “Pope” Cody, a criminal on the run from the law living in the notorious Melbourne Underworld. The role won him many awards, including IF Award’s Best Actor and the AFI’s award for Best Actor in a Leading Role. He was also named by GQ Australia as Actor of the Year for 2010.

Mendelsohn was selected as one of the subjects in the Who’s Who in Australia 2012 edition. In 2012, Mendelsohn played the supporting roles of John Daggett in Christopher Nolan’s The Dark Knight Rises and Robin Van Der Hook in Derek Cianfrance’s The Place Beyond the Pines.

In 2012, he appeared in Florence + the Machine’s music video for “Lover to Lover”. The video was directed by Vincent Haycock. In 2013, he guest starred in the TV series Girls as the father of Jessa, played by Jemima Kirke. The following year, he appeared in the critically acclaimed Starred Up, directed by David MacKenzie, for which he won Best Supporting Actor at the British Independent Film Awards.

Mendelsohn married British-American journalist Emma Forrest in June 2012. He has one daughter with Forrest, born in 2014, and one from a previous relationship. He was divorced from Forrest in 2016.

In 2014, Mendelsohn joined the cast of Bloodline, a Netflix original from the creators of Damages. The first season premiered on the site on 20 March 2015 and was well received. Mendelsohn’s performance on the series was lauded by critics, resulting in a Primetime Emmy Award win as well as a Golden Globe Award nomination. In September 2016, Netflix announced that the show had been cancelled, and that it would end after its third season in 2017. Season 3 of Bloodline received negative reviews, and Mendelsohn appeared in two episodes of it.

In 2016, he appeared in video as an onstage “stand-in” during the Nostalgia For the Present concert tour of Australian singer Sia Furler for her song, “Breathe Me”.

He portrayed the villain Director Krennic in the Star Wars franchise’s Rogue One in 2016. He called the opportunity to act in a Star Wars film “a childhood dream come true”. A couple years later in 2018, he played the role of Nolan Sorrento in Steven Spielberg’s science fiction film Ready Player One. He was cast in the role of Talos in Marvel’s film Captain Marvel alongside Samuel L. Jackson and Brie Larson. He reprised the role again for a brief cameo in Spider-Man: Far From Home, both in 2019.

In 2020, Mendelsohn starred as the lead role in the HBO crime miniseries The Outsider.