Initially based in New York City after his graduation from high school, McElhenney moved to Los Angeles at the age of 25. In 2004, McElhenney was waiting tables between acting jobs, and had met Glenn Howerton through his agent, and Charlie Day in New York while shooting a horror film. His idea for a sitcom, starring himself, Howerton and Day, was filmed on a budget of $200 and pitched to many cable networks. After receiving offers from many of the stations, McElhenney chose to sign with FX as they allowed him more creative freedom. McElhenney was contracted as It’s Always Sunny’s showrunner, and both Howerton and Day were listed as executive producers.

Before the first season of It’s Always Sunny in Philadelphia went into production, McElhenney hired actress Kaitlin Olson to play the role of Dee Reynolds. He became romantically interested in Olson “around season 2” of the series, believing her to be the funniest woman in show business. They were married in California on September 27, 2008.

In 2009, McElhenney and Olson announced their purchase of Skinner’s Bar at 226 Market Street in Philadelphia (39°57′00″N 75°08′41″W / 39.949895°N 75.144795°W / 39.949895; -75.144795). It was renamed Mac’s Tavern. They had their first son, Axel Lee McElhenney, on September 1, 2010. Olson went into labor at a Philadelphia Phillies game. The couple’s second son, Leo Grey McElhenney, was born on April 5, 2012.

McElhenney claims that 50 weeks of each year are consumed by acting, producing, and writing for the show, but he did find time to appear in the third season of Lost in the episode “Not in Portland”. This was a result of McElhenney meeting Lost co-creator and executive producer Damon Lindelof, who is a fan of It’s Always Sunny in Philadelphia. McElhenney continued the role in Lost, featured again in the sixth season for a single episode. McElhenney is a fan of Game of Thrones and was thrilled that the series’ writers, David Benioff and D.B. Weiss, asked to write an episode of It’s Always Sunny. He and his co-producers accepted the offer, resulting in the Season 9 episode “Flowers for Charlie” in 2013. In 2019, McElhenney made a cameo appearance as an extra in the Season 8 premiere episode “Winterfell”.

On July 21, 2015, McElhenney was confirmed by Mojang as the director of the upcoming animated Minecraft movie. He has since left the project.

In 2017, he appeared as a guest in the acclaimed Fargo episode “The Law of Non-Contradiction”. He received praise for his performance from critics, who saw his character as a reference to It’s Always Sunny in Philadelphia.

On September 23rd 2020, it was announced by the Wrexham Supporters Trust that a business partnership consisting of McElhenney and fellow actor Ryan Reynolds were in talks to purchase Wrexham AFC.