Dibakar Banerjee was born and brought up at New Rohtak Road near Karol Bagh, in West Delhi, and studied at Bal Bharati Public School, Delhi. After finishing his schooling, he joined the National Institute of Design, at Ahmedabad to study visual communications and graphic design, but left it two and a half years later. Back in New Delhi, he worked briefly with audio-visual filmmaker Sam Mathews.
He is married to Richa Puranesh, who has an FMCG marketing background, and the couple lived in Delhi for many years. After the success of Khosla Ka Ghosla, they moved to Mumbai and live in Parel, Mumbai with their daughter.
Banerjee joined advertising as a copywriter first with Shems Combit, TBWA Anthem, and then he joined Contract Advertising, Delhi, where he worked with Pradeep Sarkar, who was then a creative director at the agency. Screenwriter Jaideep Sahni was also one of his colleagues, who later penned Khosla Ka Ghosla's story, screenplay, dialogues and lyrics. In 1997, he left Contract to launch his own company named 'Watermark', with two ex- NID friends, to develop promos for Channel V and MTV and Ad films for major brands.
With friend and ex-colleague Jaideep Sinha he conceptualised his debut film "about Delhi, based in Delhi", Khosla Ka Ghosla (2006) starring Anupam Kher and Boman Irani, shot in locations in and around New Delhi. The film was a critical and commercial success and won the National Film Award. The film brought Banerjee in the list of new filmmakers who were bringing about a marked shift in Bollywood themes, which typically focuses on stories & characters from in and around Mumbai.
Banerjee then co-wrote and directed his second feature, Oye Lucky! Lucky Oye! (2008), which was also set in his hometown Delhi. The film starring Abhay Deol, Neetu Chandra and Paresh Rawal, premiered at the International Film Festival of India, Goa, along with Museum of Modern Art, New York. It was released in the 2008 Mumbai attacks weekend to positive reviews and went on to become a sleeper hit. Rachel Saltz of The New York Times described the film as "a breezy mix of satire and realism". Oye Lucky! Lucky Oye! won the National Film Award for Best Popular Film.
In 2010, Banerjee directed India's first film shot entirely on Digital Camera, and to be presented in the found footage style, Love Sex Aur Dhokha. The film was shown through Handycams, CCTV cameras and mobile cameras. Dealing with Issues like honour killings, MMS scandals, and sting operations, the film was released on 19 March 2010 to positive reception and strong box office results. Rajeev Masand of CNN-IBN rated it 4 out of 5, stating " Dibakar Banerjee's Love, Sex aur Dhoka is the most riveting Hindi film in recent memory. [...] You will be shocked, you will be startled, but walking out of the theatre, you know you have just seen what is possibly the most important Hindi film since Satya and Dil Chahta Hai. Not only does it redefine the concept of "realistic cinema", it opens a world of possibilities in terms of how you can shoot films now."
Banerjee's next directorial venture was Shanghai (2012), a political drama involving an assassination of a social activist. Starring Abhay Deol, Kalki Koechlin and Emraan Hashmi, the film was based on the 1967 Greek novel Z written by Vassilis Vassilikos. Shanghai premiered at the 2012 Toronto International Film Festival and released on 8 June 2012.
In 2013, Banerjee adapted Satyajit Ray's short story- Patol Babu, Film Star, starring Nawazuddin Siddiqui for Bombay Talkies. It was the part of the anthology film made by four directors Including -Anurag Kashyap, Zoya Akhtar and Karan Johar. The film was made as a celebration of 100 years of Indian cinema. Bombay Talkies under-performed at the box office, but was well received by critics; specially Banerjee's story. Anupama Chopra in her review mentioned: "Dibakar narrates his story with such tenderness and Siddiqui is so good that by the end, I was wiping away tears".
Next Banerjee went on to adapt Byomkesh Bakshi, created by the Bengali writer Sharadindu Bandyopadhyay, as Detective Byomkesh Bakshy! (2015). The film starring Sushant Singh Rajput as the titular character was produced jointly by Yash Raj Films and his own film production company Dibakar Banerjee Productions. Set in the Kolkata of 1940s, the film was released on 3 April 2015 and met with mixed to positive reviews from critics.
Banerjee co-produced Love Sex Aur Dhokha's co-writer Kanu Behl first film as a director, Titli, with Yash Raj Films. The film was selected to take part in the Un Certain Regard section of the 2014 Cannes Film Festival. It was released in India on 30 October 2015, to positive reviews. The same month he returned the National Award for Khosla ka Ghosla along with 12 other filmmakers, in protest against the Ministry of Information and Broadcasting refusing to roll back FTII's appointment of Gajendra Chauhan.
Infamous thief Bunty alias Devinder Singh wanted to kill film director Dibakar Banerjee, whose film Oye Lucky Lucky Oye was based on the notorious thief's deeds. When Bunty was being interrogated by the Kerala police after he was nabbed by the Pune police at a lodge in the city on Saturday. They claimed he had visited Kerala to kill Banerjee. A senior Pune police officer, who was present during the interrogations, said, "When Kerala police interrogated Bunty, he revealed that he wanted to kill Banerjee. However, when he failed to do so, he struck at the house of an NRI businessman."