Daniell was given few opportunities to play a 'good guy', one of the few being the biographical film Song of Love (1947) where he played the supporting part of Franz Liszt. Another such opportunity was his role as Anthony Lloyd in Voice of Terror.
He was born in Barnes, then in Surrey, and was educated at St Paul's School and at Gresham's School, Holt, Norfolk.
He made his first appearance on the stage in the provinces in 1913, and on the London stage at the Globe Theatre on 10 March 1914, walking on in the revival of Edward Knoblock's Kismet. In 1914 he joined the 2nd Battalion of the Norfolk Regiment during World War I, but was invalided out the following year after being severely wounded in combat. Thereafter he appeared at the New Theatre in October 1915 as Police Officer Clancy in Stop Thief!, and notably, from May 1916, at the prestigious Theatre Royal, Haymarket.
In April 1921, he appeared at the Empire Theatre in New York City, as Prince Charles of Vaucluse in Clair de Lune, and subsequently toured for the next three years, reappearing in London at the Garrick Theatre in August 1925 as Jack Race in Cobra. He again went to New York for the first six months of 1929, appearing at the Morosco Theatre in January as Lord Ivor Cream in Serena Blandish, returning in July to London where he played John Carlton in Secrets at the Comedy Theatre.
He again toured America in 1930–31, this time appearing on the Pacific Coast at Los Angeles as well as New York once more. He returned to London for another packed programme of stage performances, which he continued in Britain and the United States while also beginning his film career in 1929 with The Awful Truth, with leading lady Ina Claire.
Other Broadway credits include; The Woman on the Jury (1923), The Second Mrs. Tanqueray (1924), Heat Wave (1931), For Services Rendered (1933), Kind Lady (1935), Hedda Gabler (1942), Murder Without Crime (1943), Lovers and Friends (1943–44), The Winter's Tale (1946), Lady Windermere's Fan (1946–47), The First Mrs. Frazier (1947), That Lady (1949–50), The Cocktail Party (1950–51), My 3 Angels (1953–54), Lord Pengo (1962–63).
Daniell's film debut came in 1929 in Jealousy. He appeared as Professor Moriarty in the Basil Rathbone-Nigel Bruce Sherlock Holmes film The Woman in Green (1945). He appeared in other films such as Charlie Chaplin's The Great Dictator (1940) (playing Garbitsch, to sound like "garbage", a parody of Joseph Goebbels), and The Body Snatcher (1945, with Boris Karloff and Bela Lugosi) – as well as two other films in the Sherlock Holmes/Basil Rathbone series: The Voice of Terror (1942) and Sherlock Holmes in Washington (1943) with fellow Moriarty George Zucco.
He played the sleazy Baron de Varville opposite Greta Garbo in Camille (1936). Another early triumph was his portrayal of Cecil in The Private Lives of Elizabeth and Essex (1939). He also played the treacherous Lord Wolfingham (no relation to Francis Walsingham) in The Sea Hawk (1940), fighting Errol Flynn in what is often considered one of the most spectacular sword fighting duels ever filmed. When Michael Curtiz cast him in this film, Henry Daniell initially refused because he couldn't fence. Curtiz accomplished the climactic duel through the use of shadows and over-shoulder shots, with a double fencing Flynn with ingenious inter-cutting of their faces.
Towards the end of the Second World War, he appeared in one of his most memorable film roles, as the cruel Mr. Brocklehurst in Jane Eyre (1944), opposite Joan Fontaine who played Eyre. That same year he appeared in The Suspect as Charles Laughton's black-mailing next-door neighbour. In the 1950s and 1960s, he did much television, and also appeared as the malevolent Dr. Emil Zurich in Edward L. Cahn's The Four Skulls of Jonathan Drake (1959), and in an episode of Maverick, "Pappy" opposite James Garner the same year. An absolute professional, he was always on the set when needed, and impatient when delays in filming took place. Much in demand for his dry, sardonic delivery, Daniell moved easily from big-budget films, such as (uncredited) Mutiny on the Bounty (1962), to television without difficulty. In 1957, Daniell appeared as King Charles II of England in the NBC anthology series The Joseph Cotten Show in the episode "The Trial of Colonel Blood", with Michael Wilding in the title role. In the same year he played the instructing solicitor to Charles Laughton's leading counsel barrister in Witness for the Prosecution (1957).
The actor claimed one of his most favorite roles was as Tony Curtis' supervisor in the acclaimed Blake Edwards film, "Mister Cory" (1957) at a time when the actor's career was clearly slowing down, but Daniell retained some of the best and most memorable lines in the movie, "A gentleman never grabs. Manners, Mister Cory. I find them a prerequisite in any circumstance."
He performed in several episodes of Boris Karloff's TV series Thriller.
His last role was a small uncredited appearance as the British Ambassador in the 1964 film My Fair Lady directed by his old friend George Cukor. The scene in which he appears takes place at the embassy ball. He is seen as Eliza arrives and when introduced to her shakes her hand and says "Miss Doolittle". Later, Daniell presents Eliza to the Queen of Transylvania with the one line, "Miss Doolittle, ma'am." In the commentary on the DVD, at the moment he appears on-screen in the role, it is mentioned that the day he shot the scene was "his last day on earth", as he died from a heart attack that very evening on the set of My Fair Lady on 31 October 1963 in Santa Monica, California.
He married Ann Knox and, in the years following World War II, lived in Los Angeles, California.
He and Ann were involved in a Hollywood sex scandal in the late 1930s, as reported by visiting author P.G. Wodehouse, who wrote to his stepdaughter Leonora about the couple:
Apparently they go down to Los Angeles and either (a) indulge in or (b) witness orgies – probably both … there’s something pleasantly domestic about a husband and wife sitting side by side with their eyes glued to peepholes, watching the baser elements whoop it up. And what I want to know is – where are these orgies? I feel I’ve been missing something.
An obituary distributed by United Press International and datelined Hollywood reported, "Daniell was stricken yesterday [October 31, 1963] in his home in nearby Santa Monica a few hours before he was due to report on the set of the film version of My Fair Lady at Warner Bros. studio."