After trying his skills with small-time filmmakers as an assistant, Bhandarkar landed up as an assistant to Ram Gopal Varma. He even played his first cameo in his 1995 film Rangeela where he was the associate director to Ram Gopal Varma. A couple of years later he made his directorial debut with Trishakti which took more than three years to make and released in 1999. The film had a relatively low key cast and was largely ignored at the box office. After two years he directed Chandni Bar (2001) starring Tabu and Atul Kulkarni with a budget of Rs 15 million. The film was critically acclaimed and a box office success, which took Bhandarkar into the top league of filmmakers in Bollywood. He received his first National Award for this film and thereon won National awards for his films Page-3 and Traffic Signal. His movie Fashion (2008) also won National Awards for Best Actress (Priyanka Chopra) and for Best Supporting Actress (Kangana Ranaut).

He is a great devotee of the Hindu God Siddhivinayak and has been walking from his house in Khar, Mumbai to the temple for the past 18 years on every Tuesday. Madhur also regularly visits Vaishno Devi temple in Jammu & Kashmir and the Golden Temple in Amritsar. According to him, the film Corporate was his most difficult film as people in corporate world would shun him after he bared Page 3 culture in his earlier film. He took inspiration for Corporate from the Coke – Pepsi controversy. He has been invited to deliver lectures on corporate issues to management students after the release of Corporate. (Interview to TV channel IBN Lokmat on 26 November 2008) Bhandarkar married his girlfriend Renu Namboodiri on 15 December 2003 in Mumbai. They have a daughter named Siddhi.

However, prior to this, in 2005, in a bizarre turn of events, Preeti was arrested for hiring a contract killer to murder Bhandarkar. She was to pay Rs 75,000 to Naresh Pardeshi, the associate of infamous Mumbai don Arun Gawli to kill the filmmaker. Reports suggest that the model demanded her money back because the execution failed to take place. When Gawli was made aware of this, he instructed his lawyer to file a complaint against her at the Agripada police station. The rape case was cited as one of the reasons why she wanted the filmmaker dead. After a week long probe, the police arrested her while she was on her way to the Versova Police station. The initial trial began at a fast-track court in Sewri, which shut down, and consequently, the case was transferred to the sessions court. She was awarded a three-year imprisonment and found guilty of conspiracy, aiding and abetting crime.

In Nov, 2010 National Film Archive of India (NFAI) announced to preserve all the films of Madhur Bhandarkar. Chandni Bar, Page-3, Corporate, Traffic Signal, Fashion and Jail found space in Government’s Archival data for Indian films.

While in 2012, Supreme Court justices H L Dattu and C K Prasad passed an order quashing the ongoing criminal proceedings, noting that Preeti Jain did not want to pursue the case against Bhandarkar and that the Mumbai police had earlier called the claim false and thus given him a clean chit. Initially, in 2004, Preeti Jain, a model and actress, accused Madhur Bhandarkar of rape and lodged a complaint with the Versova Police where she alleged that the filmmaker had raped her 16 times between 1999 and 2004 with the promise of casting her in his films. She also alleged that he promised to marry her and produced SMS texts, where he had reportedly asked for sexual favours, as evidence. Bhandarkar claimed that the complaint was cheating-related, not about rape. In 2011, a Mumbai court found substance in her complaint and asked Bhandarkar to face the trial. He challenged the lower court’s order before the higher court, which too rejected his plea. In 2011, the police filed a report where it stated that the claim against the filmmaker was ‘maliciously false’. The court rejected this report and held there was prima facie a case against Bhandarkar. The Bombay High Court confirmed the magisterial court’s decision to continue with Bhandarkar’s prosecution. In 2011, the Bombay high court asked the filmmaker to face the trial in the case. He challenged the court’s order, which was later set aside by the Supreme Court.