Malik was born Athar ul-Haque Malik in Bahawalpur, Pakistan, the son of Zaibunisa and Mazhar ul-Haque Malik, a doctor who would soon qualify as an ophthalmic surgeon in Britain. When his father secured a job as a surgeon in Moorfields Eye Hospital, Malik was brought to London in 1956, aged three, with his four older brothers. At age 10 he was sent to school in Quetta, Balochistan for one year, and then Bec Grammar School, a selective state school in Upper Tooting, London.
Malik is mildly dyslexic and found academic studies trying; after an unsatisfactory stint of business studies and a term studying acting at the Questors Theatre, he won a scholarship to Guildhall School of Music and Drama. Before long, he was working with the Old Vic and Royal Shakespeare companies, where he played the title role in the Shakespeare play Othello.
In 1982, five years after leaving the Guildhall, Malik was cast as the doomed young Indian Hari Kumar in the Granada Television production of The Jewel in the Crown, based on Paul Scott's Raj Quartet. During filming, David Lean cast him in his film production of A Passage to India, the two popular and much-praised productions assuring his professional future. He also appeared in a television serialisation of M.M. Kaye's The Far Pavilions. All three were released in 1984.
In 1985, Malik played Julius Court, in The Black Tower by PD James (Anglia Television).
In 1986 he played in the TV film Harem with Omar Sharif and Nancy Travis.
In 1988 Malik apppeared on US television, playing Ved Lahari on the ABC series Hothouse. He had a major role as an Afghani mujahadeen ally of James Bond in the film The Living Daylights (1987).
He played real life murderer Charles Sobhraj in the 1989 Australian television film Shadow of the Cobra.
He appeared as Shamy, an Anglo-Indian petty criminal and con-man in "What Makes Shamy Run?", an episode of the British television series Minder. Additionally, he played Orpheus of the Greek myth Orpheus and Eurydice in an episode of The Storyteller's Greek Myths, directed by Jim Henson and first aired in 1990.
Malik played the role of the son of an Indian mobster in the 1992 film City of Joy.
In 1993 Malik narrated Salman Rushdie's Haroun and the Sea of Stories on BBC television's Jackanory.
In 1994 Malik played Salim Abu Aziz, a stereotypical Islamist, opposite Arnold Schwarzenegger in True Lies. Malik accepted the role, which he described as "a hoot", as he had been 14 months without work and was being pursued by the Inland Revenue for £32,000. He also played an art professor in the 1994 film Uncovered.
Following his appearance in True Lies, Malik was offered several roles in other action movies, but turned them down, later explaining: "I didn't want to do action movies that weren't as good." He instead accepted a role in the British film Clockwork Mice. Malik also became closely associated with Tom Stoppard's 1995 play Indian Ink, creating the role of Nirad in the work's London premiere, and returning to the role for the 1999 American premiere at San Francisco's American Conservatory Theater.
He also played the role of Ramzi Ahmed Yousef in Path to Paradise, a 1997 made-for-TV film about the 1993 World Trade Center bombing. In 1998, he starred in Catherine Cookson's Colourblind.
In 2000, he appeared in the Mystery Theatre series Second Sight, starring Clive Owen as a detective who is losing his vision. Malik appears in the "Hide and Seek" episode as Dr. Faiz Ahmed, the accused murderer of his lover, a violinist named Vicky Inghams (Helen Hathorn).
In 2001, he narrated the television documentary Hajj: The Journey of a Lifetime for British television. He played Zubin Khan in the BBC hospital drama Holby City from 2003 to 2005. Also in 2005 he starred in a television adaptation of the novel The English Harem as Sam, a West London Muslim who owns a restaurant. Martine McCutcheon plays a young working class girl, Tracy, who, against the wishes of her parents and racist ex-boyfriend, becomes one of his three wives.
Malik had a supporting role in the 2010 film The Wolfman. He also appeared in the 2010 and 2012 series of Upstairs Downstairs as Amanjit Singh, secretary to Maud, Lady Holland. In 2011-2013, he played the role of Francesc Gacet in the television series Borgia, directed by Tom Fontana.
Malik also played a Zodangan General in John Carter in 2012.
He also played Milkha Singh's father in the 2013 Hindi film Bhaag Milkha Bhaag, his first appearance in a film produced in India. He worked in another Bollywood movie Mirzya which is directed by Rakeysh Omprakash Mehra. It is the love story of Mirza Sahibaan, a popular tragic love story of Punjab.
In 2014, he played Bunran "Bunny" Latif, a retired Pakistani general in season 4 of Homeland. In 2016, he played rich businessman Eddie Zubayr in series 6 of Cold Feet. He also played the Maharajah in the second series of the acclaimed Channel 4 TV series Indian Summers in 2016.
By Malik's own account, the sudden success he enjoyed in 1984 resulted in excessive drinking: "I was surrounded by people who admired me and I took all of that home with me," he said when interviewed in 2003; "I paid lots of attention to my ego, and not enough to my spirit. It was totally unhealthy, like an illness." The result was a strain on his marriage, leading to his wife walking out on him less than ten years later. He also ran up high bills on his credit card, and by 1993 he owed £55,000 to the bank and £32,000 to the Inland Revenue, and was on the verge of being declared bankrupt when he landed the lucrative part of a terrorist in James Cameron's True Lies.
Malik took a major role in fundraising for relief work for victims of the Gujarat earthquake in 2001, and also appeared on the DEC Pakistan Floods Appeal advertisement in 2010. He lives with his wife Gina Rowe, a fellow student at the Guildhall, and whom he married in 1980. They have two daughters, Jessica and Keira. Although from a Muslim background, and having insisted that his character on Holby City should be a Muslim, Malik describes himself as "not a practising Muslim. I'm probably an apostate, and liable for any right-minded Muslim fundamentalist to put me on a list of people to stamp out."