Smith's father, Kenneth, was born in Tow Law, County Durham, and worked at a coal mine during the Second World War looking after the pit ponies. After the war he moved to London, and married Smith's mother, whose parents owned a greengrocer's store in Chiswick, London. When the government legalised high street betting, he turned the shop into the first betting shop in Chiswick.
Smith was born and brought up in Chiswick. He was educated at Hogarth Primary School, Chiswick, and at Latymer Upper School, an independent school in Hammersmith. He went on to study experimental psychology at New College, Oxford.
While at Oxford University, Smith produced The Tempest, and performed at the Edinburgh Fringe with the Oxford University Dramatic Society. One year they shared a venue with the Cambridge Footlights, directed by John Lloyd. His extra-curricular activities while at university led to his joining the Royal Court Theatre production team in London, and then Bristol Old Vic. He was also associate director of Sheffield's Crucible Theatre for two years. Later, he directed a theatre production of Not in Front of the Audience.
John Lloyd later got the opportunity to develop the idea that became the satirical BBC television series Not the Nine O'clock News. This was followed briefly by Smith and Goody (with Bob Goody) and then the comedy sketch series Alas Smith and Jones, co-starring Griff Rhys Jones, its title being a pun on the name of the American television series Alias Smith and Jones. In 1982, he starred as the lead role in ITV drama Muck and Brass where he played Tom Craig, a ruthless property developer. In 1984, he appeared in the Minder episode "A Star Is Gorn" playing the character Cyril Ash, a record producer. He also guest-starred on The Goodies episode Animals. At the end of the 1980s, he played the title role in the sitcom Colin's Sandwich (1988–90), playing a British Rail employee with aspirations to be a writer.
In 1981, Smith and Griff Rhys Jones founded TalkBack Productions, a company that has produced many of the most significant British comedy shows of the past two decades, including Smack the Pony, Da Ali G Show, I'm Alan Partridge and Big Train. In 2000, the company was sold to Pearson for £62 million.
Smith co-wrote and took the lead role in the space comedy Morons from Outer Space (1985), but the film failed to make much impact. His next cinema effort was better received as director of The Tall Guy (1989), giving Emma Thompson a major screen role. Perhaps his best-known film in America is Brain Donors, the 1992 update of the Marx Brothers film A Night at the Opera, starring Smith as a cheeky, opportunistic cab driver turned ballet promoter. Paramount Pictures considered this film the outstanding comedy of the year, but when the producers left Paramount for another studio, Paramount withdrew its support for the film.
In 1987, Smith recorded a single with Kim Wilde for Comic Relief: a cover of the Christmas song Rockin' Around the Christmas Tree with some additional comedy lines written by Smith and Jones. The pairing of Smith and Wilde was a comic allusion to the duo Mel & Kim. The song reached number three in the UK charts. He appeared in The Princess Bride as the Albino.
Smith and Jones were reunited in 2005 for a review/revival of their earlier television series in The Smith And Jones Sketchbook. Smith joked that "Obviously, Griff's got more money than me so he came to work in a Rolls Royce and I came on a bicycle. But it was great fun to do and we are firmly committed to doing something new together, because you don't chuck that sort of chemistry away. Of course, I'll have to pretend I like Restoration.
In August 2006, Smith returned to the theatre stage after some 20 years, appearing at the Edinburgh Fringe festival in Allegiance, Irish journalist and author Mary Kenny's play about Churchill's encounter with the Irish nationalist leader Michael Collins in 1921. The play initially caused some controversy, with Smith proposing to flout the Scottish ban on smoking in public places, but the scene was quickly adapted after gaining the required amount of publicity. The play was directed by Brian Gilbert and produced by Daniel Jewel. In 2006, he also appeared in Hustle as Benjamin Frasier, a pub landlord who was scammed by the Hustle team when his on-screen son Joey tried to launch a rap career.
In autumn 2006, Smith starred opposite Belinda Lang in a tour of a new comedy An Hour and a Half Late by French playwright Gérald Sibleyras, which was adapted by Smith. He then directed a West End revival of Charley's Aunt starring Stephen Tompkinson. From October 2007 to January 2008 he played the role of Wilbur Turnblad in the London production of Hairspray at the Shaftesbury Theatre.
Smith was married to Pamela (née Gay-Rees), a former model who grew up in Easington and Durham. The couple had houses in St John's Wood (backing onto Lord's Cricket Ground), and the hamlet of Little Haseley, Oxfordshire (a Grade II-listed barn conversion, sold in 2011), as well as a property in Barbados.
Smith was hospitalised in 1999 with stomach ulcers, after an accidental overdose of more than 50 Nurofen Plus tablets a day, after previously admitting an addiction to sleeping pills. Smith said at the time that the pressures of film work were a contributing factor, along with a desperate need to ease the pain caused by gout. Partly as a result, he agreed to sell Talkback Productions. On 31 December 2008, Smith appeared on Celebrity Mastermind whilst suffering from severe pharyngitis.
On the morning of 19 July 2013, the London Ambulance Service was called to Smith's home in north-west London. Smith was confirmed dead by the ambulance crew, with a later post-mortem confirming death from a heart attack. Co-star Griff Rhys Jones said: "To everybody who ever met him, Mel was a force for life. He had a relish for it that seemed utterly inexhaustible". Rowan Atkinson, who starred in Smith's film Bean and starred with him in Not the Nine O'Clock News, said: "He had a wonderfully generous and sympathetic presence both on and off screen". Stephen Fry noted that Smith "lived a full life, but was kind, funny and wonderful to know."
In the second episode of Little Britain Abroad, Andy Pipkin is mistaken by one of the tourists as Mel Smith.Too Much Sun television series, six episodes (2000)
Tough Target television series, one episode (1995)
Dream On, one episode (1994)
Morons from Outer Space (1985), co-written with Griff Rhys Jones