McCarthy was born in Westfield, New Jersey. His mother worked for a newspaper and his father was involved in investments and stocks. McCarthy moved to Bernardsville, New Jersey, as a teenager and attended the Pingry School. He also attended the town's public school, Bernards High School, for part of a year.
McCarthy began acting on films, making his breakout role for the 1983 comedy film Class. He involuntarily became a member of the '80s Hollywood group of young actors known as the "Brat Pack". They starred in a few films, St. Elmo's Fire and Pretty in Pink. He starred in the 1987 films, Mannequin and Less Than Zero, a theatrical adaptation of Bret Easton Ellis' novel. In 1985, McCarthy starred with Donald Sutherland and Kevin Dillon in Heaven Help Us (also known as Catholic Boys) as Michael Dunn. McCarthy made his Broadway debut in The Boys of Winter. He quickly returned to Hollywood in 1988 to star in several films, such as Fresh Horses and Kansas. He had another hit with the 1989 comedy film Weekend at Bernie's.
He returned to Broadway theatre to star in Side Man, McCarthy's version of the play won a Tony Award for Best Play in 1999. In 2003 McCarthy was set to guest star in two episodes of Law & Order: Criminal Intent. Due to bad relations with actor Vincent D'Onofrio, series creator Dick Wolf decided against it. Wolf later stated, "Mr. McCarthy engaged in fractious behavior from the moment he walked on the set." McCarthy fired back in a statement of his own saying, "I was fired because I refused to allow a fellow actor to threaten me with physical violence, bully me and try to direct me." Despite this incident, he later guest starred in an episode of Law & Order: Criminal Intent (with Chris Noth, not D'Onofrio) that originally aired in November 2007. In 2004, he played Dr. Hook in Kingdom Hospital. He appeared in five episodes of the now-cancelled NBC television series E-Ring. In 2008, he starred in the NBC television series Lipstick Jungle as a billionaire, but was eventually cancelled, and had a minor role in The Spiderwick Chronicles. He is ranked #40 on VH1's 100 Greatest Teen Stars of all-time list. McCarthy recently directed several episodes of the hit CW television series, Gossip Girl, including Touch of Eva in the fourth season. McCarthy is also known for an incident at the 2013 Comic Con Philly event, where his security staff assaulted "Skippy," a popular YouTube character, who was attempting to photograph the Mannequin actor at the time. In 2010 and 2011, he appeared in the hit USA show White Collar; he was praised by several critics for his performance in the episodes. He returned to the series in the next season to direct the episode "Neighborhood Watch". In 2015, he directed 3 episodes (ep. 11, 13 & 16) in season 2 of the NBC hit television show The Blacklist starring James Spader and Megan Boone. In 2016, he starred in the short-lived ABC drama The Family.
McCarthy became a travel writer, and is currently an Editor at Large at National Geographic Traveler magazine. In 2010, McCarthy was escorted out of an underground church in Lalibela, Ethiopia, for entering the site without documentation. He had been in the church on assignment for the travel magazine Afar. A book written by McCarthy, The Longest Way Home: One Man's Quest for the Courage to Settle Down, was published in 2012. In February/March 2015, National Geographic published his account, entitled "A Song for Ireland", of his return to the house in the townland of Lacka West in the parish of Duagh in County Kerry in Ireland from which his greatgrandfather John McCarthy had emigrated in the late 1800s.
In 1992, he entered a detoxification program and has been sober since. In 1999, McCarthy married his college sweetheart Carol Schneider 20 years after they first dated. He later stated his reasons for tracking her down after they had drifted apart: "I ran into someone who said they had seen Carol and her boyfriend and they seemed really happy, and for some reason it bothered me for a week. I called her and asked her if she was really with this guy and asked her out for coffee." In 2002, Schneider gave birth to a son, Sam. The couple divorced in 2005. In 2004, he announced that he once had a serious alcohol problem, which began at age 12.
On August 28, 2011, he married Dolores Rice. They have a daughter, Willow. In September 2013, it was announced that the couple were expecting their second, and his third, child. McCarthy mentioned on "Good Day New York" on March 29, 2017, that his third child is a two-year old son.
Fantafestival1987: Won, "Best Actor" – Mannequin
Sedona International Film Festival2005: Won, "Best Short Film" – News for the Church