In 1964, after a few weeks working for a local cabinet-maker he joined the Royal Navy, initially enlisting for twelve years as a junior second class engineering mechanic (stoker) at RNTE Shotley near Ipswich, better known as the boys’ training establishment HMS Ganges. He served in the Navy for several years including a spell on the aircraft carrier HMS Eagle, before throwing an officer off a boat landing jetty in Scotland and receiving a dishonourable discharge. In his autobiography he claims this was in part a reaction to this officer’s abuse of his authority, in part a dare by his shipmates and in part a way of getting out of the Navy, with which he had become disillusioned. Bannatyne was nineteen when this happened. After the incident he had to serve nine months in Colchester military detention centre. He later spent ten days in Glasgow’s Barlinnie prison for not paying a £10 fine in relation to a charge of breach of the peace and resisting arrest.

His business career began almost immediately after his move to Stockton-on-Tees with an ice cream van purchased for £450. He soon expanded by buying more vans during the period of the Glasgow Ice Cream Wars. He sold the business for £28,000, founding a nursing home business called Quality Care Homes which he then sold for £26 million in 1997 and children’s nursery chain Just Learning for £12 million. The Just Learning chief executive during the 1992–97 period was Michael Fallon while out of office as an MP.

From 2005 until 2015, Duncan was a Dragon on the BBC television series Dragons’ Den. During his time on the show he invested in 36 businesses.

Bannatyne has since expanded into health clubs, with the Bannatyne Health Club & Spa chain to his name, and also hotels and property. He acquired 26 health clubs from Hilton Hotels in August 2006 at a price of £92 million. The Bannatyne Group is now the largest independent chain of health clubs in the United Kingdom with 71 sites. The business currently (June 2018) has 46 spas with plans for more, including at its first Northern Ireland-based health club in Belfast and it operates 4 hotels.

He currently lives in Portugal. Bannatyne was awarded an honorary doctorate of science by Glasgow Caledonian University on 5 July 2006 for services to business and charity. He was also awarded an honorary doctorate of business administration from Teesside University, on 6 February 2009.

Bannatyne received his OBE partly in recognition for his work with charities such as Mary’s meals. He has funded several projects over a ten-year period in Romania, including Casa Bannatyne in Târgu-Mureş, a hospice for orphans with HIV and AIDS in which he invested £80,000. In March 2008, he established the Bannatyne Charitable Trust.

On 19 May 2008, Bannatyne added his support to the launch of the Geared for Giving Campaign at the House of Commons to encourage UK business leaders to set up and promote a Workplace Giving scheme to benefit UK registered charities with tax effective donations through employees’ pay. He then helped to promote Clydesdale Bank’s and Yorkshire Bank’s efforts to promote the programme through ATM (Automated Teller Machine) rolls. “They are really going for it, over 20 per cent of their employees are giving money through this system”, Bannatyne says.

On 29 August 2008, Bannatyne appeared on television programme Who Wants to Be a Millionaire?, raising £20,000 for charity NCH.

He became President of the charity No Smoking Day in October 2008. The charity runs the annual health awareness campaign – helping people who want to stop smoking. This followed on from him making a documentary about the ethics of British American Tobacco.

On appearing on the Question Time panel on 7 February 2008, he revealed having been a donor to the Labour Party under Blair. He also voiced his support for Brown, but criticised the Cabinet for what he described as “petty squabbles based on personal ambition”. In March 2011, Bannatyne appeared to switch political affiliations again, by backing certain measures imposed in Chancellor George Osborne’s budget even though he mocked the government a few months earlier.

In August 2010, he agreed to become Patron of PC David Rathband’s Blue Lamp Foundation, a charity established by the Northumbria Police Constable David Rathband, who was blinded by gunshot wounds in the 2010 Northumbria Police manhunt.

His sixtieth birthday was celebrated at Murano’s in London, with celebrities such as David Coulthard, James Caan, Theo Paphitis and Anna Ryder Richardson. A second party was held in the North East of England and was headlined by UK soul singer Beverley Knight and featured Chesney Hawkes, with the festivities occurring in a converted warehouse in Darlington, County Durham. He openly discussed having had cosmetic surgery under his eyes on The Graham Norton Show; had an acting role in the Tyne Tees Television comedy pilot Girl’s Club where amongst other actors, he performed alongside the actress Georgia Taylor. In 2011, he revealed that he suffers from prosopagnosia, which makes it difficult to recognise familiar faces.

In 2015, Bannatyne took part in the fifteenth series of I’m a Celebrity…Get Me Out of Here!. His fee for taking part in the show was donated to the Operation Smile charity.

In April 2015, a week after signing a letter to The Daily Telegraph supporting the Conservative Party in the 2015 General Election, he reversed his position, and pledged his vote to Labour, praising leader Ed Miliband’s “courage” in pledging to scrap non-domiciled tax status.

Bannatyne voted for the United Kingdom to leave the European Union in the 2016 referendum on that issue.

Bannatyne married Nigora Whitehorn in Portugal on 3 June 2017. Bannatyne has four children by his first wife, Gail (m. 1983): Hollie, Abigail, Jennifer and Eve; two with his second wife, Joanne (m. 2006): Emily (b. 1999) and Thomas (b. 2002). He also has two grandchildren, Ava and Austin, from his eldest daughter.

In 2020, Bannatyne took part in a BBC series called The Real Marigold Hotel He joined other celebrities such as Britt Ekland, Dame Zandra Rhodes, Paul Elliott, Henry Blofeld, John Altman, Susie Blake, and Barbara Dickson.