Benedict was born Dirk Niewoehner in Helena, Montana, the son of Priscilla Mella (née Metzger), an accountant, and George Edward Niewoehner, a lawyer. He grew up in White Sulphur Springs, Montana. He graduated from Whitman College in 1967. Benedict allegedly chose his stage name from a serving of Eggs Benedict he had prior to his acting career.
Benedict's film debut was in the 1972 film Georgia, Georgia. When the New York run for Butterflies Are Free ended, he received an offer to repeat his performance in Hawaii, opposite Barbara Rush. While there, he appeared as a guest lead on Hawaii Five-O. The producers of a horror film called Sssssss (1973) saw Benedict's performance in Hawaii Five-O and promptly cast him as the lead in that movie. He next played the psychotic wife-beating husband of Twiggy in her American film debut, W (1974). Benedict starred in the television series Chopper One, which aired for one season in 1974. He also made an appearance in Charlie's Angels.
Benedict's career break came in 1978 when he appeared as Lieutenant Starbuck in the movie and television series Battlestar Galactica. The same year Benedict starred in the TV movie Cruise Into Terror, and appeared in the ensemble movie Scavenger Hunt the following year.
In 1981, Benedict starred alongside Linda Blair in an action-comedy movie called Ruckus. In 1983, Dirk gained further popularity as con-man Lieutenant Templeton "Face" Peck in 1980s action television series The A-Team. He played "Faceman" from 1982 (1982) to 1986 (1986), although the series didn't air until January 1983, and the final episode wasn't shown until 1987 rebroadcasts. The second season episode "Steel" includes a scene at Universal Studios where Face is seen looking bemused as a Cylon walks by him as an in-joke to his previous role in Battlestar Galactica. The clip is incorporated into the series' opening credit sequence from season 3 onward.
In 1986, Benedict starred as low-life band manager Harry Smilac in the movie Body Slam along with Lou Albano, Roddy Piper, and cameo appearances by Freddie Blassie, Ric Flair, and Bruno Sammartino. His character Smilac ends up managing the pro-wrestler "Quick Rick" Roberts (Piper) and faces opposition by Captain Lou and his wrestling tag-team "the Cannibals".
In 1987, Benedict took the title role of Shakespeare's Hamlet at the Abbey Theatre. Both his performance and the entire production were drubbed by critics. Benedict starred in the 1989 TV movie Trenchcoat in Paradise.
In 1991, Benedict starred in Blue Tornado, playing Alex, call sign Fireball, an Italian Air Force fighter pilot. Benedict published an autobiography, Confessions of a Kamikaze Cowboy: A True Story of Discovery, Acting, Health, Illness, Recovery, and Life (Avery Publishing ISBN 0895294796). In 1993, Benedict starred in Shadow Force.
Benedict also appeared as Jake Barnes in the 1996 action-adventure film Alaska.
In 2000, Benedict wrote and directed his first screenplay, Cahoots. In 2005, Benedict played an impostor, pretending to be an '80s movie star who wants to moderate a charity performance in Goldene Zeiten (Golden Times) by Peter Thorwarth.
In 2006, he wrote an online essay criticizing the then-airing Battlestar Galactica re-imagined series and, especially, its casting of a woman as his character, Starbuck, writing that "the war against masculinity has been won" and that "a television show based on hope, spiritual faith, and family is unimagined and regurgitated as a show of despair, sexual violence and family dysfunction".
He appeared as a contestant on the 2007 U.K. series of Celebrity Big Brother. He arrived on launch night in a replica of the A-Team van, smoking a cigar and accompanied by Post & Carpenter's A-Team theme tune.
In 2010, Benedict starred in a stage production of Prescription: Murder playing Lieutenant Columbo for the Middle Ground Theatre Company in UK. Benedict also made a cameo appearance in the 2010 film adaptation of The A-Team as Pensacola Prisoner Milt.
In the 1970s, Benedict survived a prostate tumor believed to have been cancerous. Having rejected conventional medical treatment, he credited his survival to the adoption of a macrobiotic diet recommended to him by actress Gloria Swanson. In 1986, he married Toni Hudson, an actress with whom he has two sons, George and Roland. Hudson had previously appeared as Dana in the fourth season A-Team episode titled "Blood, Sweat and Cheers". They divorced in 1995. In 1998, Benedict learned that he also has another son, John Talbert (born 1968), from an earlier relationship, who had been given up for adoption. With the help of his adoptive parents, Talbert discovered and contacted his birth parents.