Between 1996 and 1999, Carrey continued his success after earning lead roles in several highly popular films including The Cable Guy (1996), Liar Liar (1997), in which he was nominated for another Golden Globe Award and in the critically acclaimed films The Truman Show and Man on the Moon, in 1998 and 1999, respectively. Both films earned Carrey Golden Globe awards. Since earning both awards, the only two in his three decade career, Carrey continued to star in highly acclaimed comedy films, including How the Grinch Stole Christmas (2000) where he played the title character, Bruce Almighty (2003), where he portrayed the role of unlucky TV reporter Bruce Nolan, Lemony Snicket's A Series of Unfortunate Events (2004), Fun with Dick and Jane (2005) and Yes Man (2008). Carrey has also taken on more serious roles including Joel Barish in Eternal Sunshine of the Spotless Mind (2004) alongside Kate Winslet and Kirsten Dunst which earned him another Golden Globe nomination, and Steven Jay Russell in I Love You Phillip Morris (2010) alongside Ewan McGregor.

Carrey was born in Newmarket, Ontario, the son of Kathleen (née Oram), a homemaker, and Percy Carrey, a musician and accountant. He has three older siblings, John, Patricia, and Rita. He was raised Roman Catholic. His mother was of Scottish descent and his father was of French Canadian ancestry (the family's original surname was Carré). After his family moved to Scarborough, Ontario when Carrey was 14 years old, he attended Blessed Trinity Catholic School, in North York, for two years, enrolled at Agincourt Collegiate Institute for another year, then briefly attended Northview Heights Secondary School, for the remainder of his high school career (altogether, he spent three years in Grade 10).

Carrey lived in Burlington, Ontario, for eight years and attended Aldershot High School, where he once opened for 1980s new wave band Spoons. In a Hamilton Spectator interview (February 2007), Carrey remarked, "If my career in show business hadn't panned out I would probably be working today in Hamilton, Ontario at the Dofasco steel mill." When looking across the Burlington Bay toward Hamilton, he could see the mills and thought, "Those were where the great jobs were." At this point, he already had experience working in a science testing facility in Richmond Hill, Ontario.

In 1979, under the management of Leatrice Spevack, Carrey started doing stand-up comedy at Yuk Yuk's in Toronto, where he rose to become a headliner in February 1981, shortly after his 19th birthday. One reviewer in the Toronto Star raved that Carrey was "a genuine star coming to life." In the early 1980s, Carrey moved to Los Angeles and started working at The Comedy Store, where he was noticed by comedian Rodney Dangerfield, who signed the young comedian to open Dangerfield's tour performances.

Carrey then turned his attention to the film and television industries, auditioning to be a cast member for the 1980–1981 season of NBC's Saturday Night Live. Carrey was not selected for the position (although he did host the show in May 1996). Joel Schumacher had him audition for a role in D.C. Cab, though in the end, nothing ever came of it. His first lead role on television was Skip Tarkenton, a young animation producer on NBC's short-lived The Duck Factory, airing from April 12, 1984, to July 11, 1984, and offering a behind-the-scenes look at the crew that produced a children's cartoon.

Carrey continued working in smaller film and television roles, which led to a friendship with fellow comedian Damon Wayans, who co-starred with Carrey as an extraterrestrial in 1989's Earth Girls Are Easy. When Wayans' brother Keenen began developing a sketch comedy show for Fox called In Living Color, Carrey was hired as a cast member, whose unusual characters included masochistic, accident-prone safety inspector Fire Marshall Bill, and masculine female bodybuilder Vera de Milo.

Carrey made his film debut in Rubberface (1983), which was released as Introducing...Janet. Later that year, he won the leading role in Damian Lee's Canadian skiing comedy Copper Mountain, which included his impersonation of Sammy Davis Jr. Since the film had a less than one hour runtime consisting largely of musical performances by Rita Coolidge and Rompin' Ronnie Hawkins, it was not considered a genuine feature film. Two years later, in 1985, Carrey saw his first major starring role in the dark comedy Once Bitten, in the role of Mark Kendall, a teen virgin pursued by a 400-year old female vampire (played by Lauren Hutton). After supporting roles in films such as Peggy Sue Got Married (1986), Earth Girls Are Easy (1988), and The Dead Pool (1988), Carrey did not experience true stardom until starring in the 1994 comedy Ace Ventura: Pet Detective, which premiered only months before In Living Color ended.

Ace Ventura was panned by critics, and earned Carrey a 1995 Golden Raspberry Award nomination as Worst New Star. But the film was as embraced by fans as it was derided by critics. The Ventura character became a pop icon, and the film made Carrey a superstar. It was a huge commercial success, as were his two other starring roles from that year: The Mask and Dumb and Dumber. In 1995, Carrey appeared as the Riddler in Batman Forever and reprised his role as Ace Ventura in Ace Ventura: When Nature Calls. Both films were successful at the box office and earned Carrey multi-million-dollar paychecks.

Carrey earned $20 million for his next film, The Cable Guy (directed by Ben Stiller), a record sum for a comedy actor. The cult film did not do well with critics, but Carrey quickly rebounded with the successful Liar Liar, a return to his trademark comedy style.

Carrey took a slight pay cut to play a more serious role to star in the critically-praised science-fiction dramedy The Truman Show (1998), a change of pace that led to forecasts of Academy Award nominations. Although the movie was nominated for three other awards, Carrey did not personally receive a nomination, leading him to joke that "it's an honor just to be nominated...oh no," during his appearance on the Oscar telecast. However, Carrey did win a Golden Globe for Best Actor in a Drama and an MTV Movie Award for Best Male Performance. That same year, Carrey appeared as a fictionalized version of himself on the final episode of Garry Shandling's The Larry Sanders Show, in which he deliberately ripped into Shandling's character.