Craig was born Michael Francis Gregson in Poona, British India, the son of Donald Gregson, a captain in the 3rd Indian Cavalry. He came to Britain with his family when aged three, and went to Canada when he was ten. At sixteen he joined the British Merchant Navy.
Michael Craig began his career in the theatre — his first job was as an assistant stage manager at the Castle Theatre, Farnham in 1950.
His many stage credits include A Whistle in the Dark (Apollo Theatre, 1961), Wars of the Roses (Season at Stratford 1963–64), Funny Girl (with Barbra Streisand at the Prince of Wales Theatre 1964), the Homecoming (Music Box Theatre New Year 1966–67) and the lead role in Trying at the Finborough Theatre in 2008.
Michael Craig's film career started in 1950 as an extra. He gained his first speaking part in 1953 in Malta Story. He appeared in a number of films, including Campbell's Kingdom (1957), Sea of Sand (1958), The Silent Enemy (1958), Sapphire (1959), Doctor in Love (1960), The Iron Maiden (1962), Modesty Blaise (1966), Turkey Shoot (1982), Ride a Wild Pony (1975) and Appointment with Death (1988).
His television credits include appearing in: Arthur of the Britons (1973), The Emigrants (1976), Rush (1976), The Professionals (1980), Shoestring (1980), The Timeless Land (1980), Triangle (1981–83), Tales of the Unexpected (1982), Robin of Sherwood (1986), Doctor Who (in the serial Terror of the Vervoids 1986), the Australian series G.P. (1989–95), Brides of Christ (1991), Grass Roots (2000) and Always Greener (2003).
Craig's scriptwriting credits include the highly acclaimed ABC-TV trilogy The Fourth Wish (1974), which starred John Meillon in his award-winning performance as the father of a dying boy. He also wrote the screenplay for the feature film of The Fourth Wish (1976), which was produced following the success of the television series. Alongside his brother, Richard Gregson and co-writer Bryan Forbes, Craig was Academy Award nominated for his screenplay of The Angry Silence (1960).
Twice married, his first wife was Babette Collier, second is Susan Walker. He is the father of Michael, Stephen and Jessica Gregson; his brother is film producer Richard Gregson, and from Richard's marriage to Natalie Wood, he is the uncle of actress Natasha Gregson Wagner.
In 2005 he released his autobiography The Smallest Giant: An Actor's Tale.