Madsen was born in Chicago, Illinois, the son of Elaine Madsen (née Melson), a filmmaker and author, and Calvin Madsen, a firefighter. His parents divorced in the 1960s, and his mother left a career in finance to pursue a career in the arts, encouraged by film critic Roger Ebert. His siblings are Cheryl Madsen, an entrepreneur, and Academy Award-nominated actress Virginia Madsen. Madsen's paternal grandparents were Danish, while his mother is of English, German, Irish, Native American and Scottish ancestry.
Madsen's acting career began at the Steppenwolf Theatre Company in Chicago, where he served as an apprentice under actor John Malkovich and appeared in a production of Of Mice and Men. In 1982, Madsen made his debut role playing an alcoholic in independent film Against All Hope. He then played a small role in WarGames in 1983. That same year, he appeared in a bit part in Edward Zwick's 1983 television movie Special Bulletin. Soon after, Madsen was cast as a psychopathic gunman in Cagney and Lacey episode "Heat", which aired October 22, 1984. During the 1980s, he appeared in other television shows such as St. Elsewhere, Miami Vice, Quantum Leap, Tour of Duty and War and Remembrance with his acting idol Robert Mitchum. He moved to Los Angeles and appeared in other films, including as arrogant baseball player Bump Bailey in The Natural (1984), a deranged killer in Kill Me Again and a gangster in Blood Red with Dennis Hopper (both 1989).
In 1991, Madsen appeared in Oliver Stone's biopic of the band The Doors starring Val Kilmer as lead singer Jim Morrisson and Ridley Scott's Thelma & Louise. In 1992, he played what is possibly his most famous role as the razor-wielding, sadistic ex-con and jewel thief Vic Vega AKA "Mr. Blonde" in Quentin Tarantino's Reservoir Dogs. The film brought Madsen attention among critics and fans although he had originally wanted to play Steve Buscemi's character "Mr. Pink" because he had more scenes with Harvey Keitel.
In 1993, Madsen starred in family film Free Willy and in the following year he appeared in crime drama The Getaway. In 1994, he made a cameo appearance as a gun salesman in revenge thriller Blue Tiger which starred his sister Virginia Madsen. In the same year Madsen appeared in western Wyatt Earp with Kevin Costner. Madsen was unable to play the role of Vincent Vega in Quentin Tarantino's Pulp Fiction as he couldn't get out of rehearsals for Wyatt Earp, which he had just decided to do. Madsen later said it was the worst mistake of his career as the role instead went to John Travolta, earning him an Academy Award nomination and re-launching his career. 1995 saw Madsen star in controversial science fiction horror film Species, sequel Free Willy 2: The Adventure Home, and crime thriller Man with a Gun.
Madsen appeared alongside Reservoir Dogs co-star Chris Penn in noir Mulholland Falls which also starred Nick Nolte in 1996. In the same year he starred in films The Winner, and The Last Days of Frankie the Fly. In 1997, Madsen starred in critically acclaimed gangster drama Donnie Brasco directed by Mike Newell and starring Johnny Depp as an undercover policeman who infiltrates Al Pacino's gang. Also in 1997 Madsen starred in drama film The Maker. The next year he appeared in the short-lived television series Vengeance Unlimited, war film Surface to Air and sequel Species II.
Since the mid-1990s, Madsen has appeared in lower-budget films released direct-to-video or television. Madsen once said of these films: "Some of them I'm only in for 10 minutes, but they bought my name, and they bought my face to put on the DVD box with a gun. What people don't always understand is that I established a certain lifestyle for my family back in the days of Species and Mulholland Falls and The Getaway. I wasn't about to move my six kids into a trailer park. So when people offered me work, it wasn't always the best, but I had to buy groceries and I had to put gas in the car."
In 1999, Madsen starred in drama film The Florentine. In 2000, he starred in action film The Alternate with Eric Roberts. In 2001 he appeared in the music video for the Michael Jackson song "You Rock My World", and voiced a character in video game Grand Theft Auto III. In 2002, he appeared in James Bond adventure Die Another Day starring Pierce Brosnan in his last film as the spy.
Madsen had a featured role in violent revenge thriller Kill Bill, his second film with Quentin Tarantino. He played assassin Budd, the brother of Bill (David Carradine) The film also starred Uma Thurman, Daryl Hannah and Lucy Liu and was released in two parts, Vol. 1 in 2003 and Vol.2 in 2004.
In 2004, Tarantino discussed an idea for a movie starring Madsen and John Travolta as The Vega Brothers. The film would have seen Madsen and Travolta reprising their roles as Vic (Mr. Blonde) from Reservoir Dogs and Vincent from Pulp Fiction. However, in 2007, because of the age of the actors and the onscreen deaths of both characters, Tarantino said the project (which he intended to call Double V Vega) was "kind of unlikely now".
In 2004 he starred in the French film Blueberry. Madsen was part of an ensemble cast for the 2005 film version of the Frank Miller graphic novel Sin City, directed by Miller and Robert Rodriguez with guest direction by Quentin Tarantino. In the same year he played Don Everest in the poker-themed ESPN series Tilt and provided voice work for the movie version of The Chronicles of Narnia: The Lion, the Witch and the Wardrobe as Maugrim the wolf, captain of the White Witch's secret police.
Also in 2005, Madsen appeared in Uwe Boll's BloodRayne, a film he described as "an abomination... It's a horrifying and preposterous movie". and was heard in the PlayStation 2 game Yakuza, where he voiced the role of Futo Shimano, the violent and unforgiving leader of a Yakuza family. He appeared in Scary Movie 4 in 2006 parodying Tim Robbins's character from War of the Worlds. In 2007, Madsen starred in boxing drama Strength and Honour. For his role in the film Madsen won the Best Actor award at both the Boston Film Festival and the New York International Independent Film and Video Festival. In the same year he played himself in mockumentary Being Michael Madsen. In 2008, Madsen had a starring role as "The Gent" in Hell Ride written and directed by Larry Bishop and executive produced by Quentin Tarantino.
Madsen played Sam Spade in Yuri Rasovsky's Grammy-nominated sonic dramatization of The Maltese Falcon, which also features Sandra Oh and Edward Herrmann in 2008. Also in 2008, Madsen co-starred in Coma, a Web series on Crackle. In 2009, Madsen starred in horror film The Bleeding. Madsen guest starred in the final season of 24 in April 2010. He played Jim Ricker, an old friend of main character Jack Bauer. In the same year he guest starred in an episode of CSI: Miami and starred in comedy film Let the Game Begin which also features Adam Rodriguez and Stephen Baldwin.
In 2011, he starred in the horror film Forest of the Living Dead. On 5 January 2012, Madsen entered the Celebrity Big Brother house where he finished in 4th place in the final. In the same year, Madsen appeared in the music video for Justin Bieber's song "As Long As You Love Me", as well as television show Blue Bloods, Roger Corman's television film Piranhaconda, video games Dishonored and Call of Duty: Black Ops II, and independent horror film Infected.
In 2013, Madsen starred in films Ashley and I'm in Love with a Church Girl and voiced a character in video game The Walking Dead: Season 2. In February 2014, filming in Las Vegas was completed for the movie Death in the Desert, directed by Josh Evans and starring Madsen as casino mogul Ted Binion (named Ray in the film). The screenplay was written by John Steppling, based on the book Death in the Desert by crime writer Cathy Scott. In August 2014, he starred in the Kill Bill-themed music video for the song "Black Widow" by Iggy Azalea featuring Rita Ora, and in the same year he starred in independent film The Ninth Cloud (which he also executive produced) and guest starred in an episode of Hawaii Five-0.
In 2015, Madsen collaborated once more with Quentin Tarantino for western The Hateful Eight. The film also starred Kurt Russell, Jennifer Jason Leigh, Samuel L. Jackson and Madsen's Reservoir Dogs co-star Tim Roth. Madsen was among a number of people rumored to have leaked the film's script before it was released causing Tarantino to almost not make the film and eventually rewrite it. Also in 2015 he starred in horror film Lumberjack Man and thriller Flipped.
In 2016, he played a dramatized role of former Texas Ranger Phil Ryan in Real Detective on the Investigation Discovery network. In the same year he starred in television show Powers, Turkish horror film Magi and action film Vigilante Diaries.
Madsen has been writing since the early 1990s. Madsen began his writing on match books, napkins and hotel stationery in between his time working on movie sets and traveling around the world. In 2005, 13 Hands Publications compiled all of his poetry and released The Complete Poetic Works of Michael Madsen, Vol I: 1995–2005. The original books released were Beer, Blood and Ashes (1995), Eat the Worm (1995), Burning in Paradise (1998), and the now out-of-print A Blessing of the Hounds (2002), 46 Down; A Book of Dreams and Other Ramblings (2004) and When Pets Kill (2005).
Madsen's friend and fellow actor Dennis Hopper described his poetry as a throwback to the Beat Generation: "I like him better than Kerouac: raunchier, more poignant, he's got street language, images I can relate to, blows my mind with his drifts of gut-wrenching riffs; this actor is a poet and he is cool, of course, he is Michael Madsen." Madsen has noted influences for his style of poetry as being Jack Kerouac and Charles Bukowski.
In 2008, Madsen was invited and appeared in Norway for the Norwegian translation and release of Burning In Paradise. In November 2010, he was the guest of honor for his poetry at the Crossing Border Festival at The Hague.
Another book of poetry, American Badass, was released on September 25, 2009. Madsen dedicated the book to the memory of his friend and Kill Bill co-star David Carradine.
His latest book, Expecting Rain, was released in October 2013 with an introduction by Jerry Hopkins.
Madsen is also an accomplished photographer. In 2006, he released his first book of photography entitled Signs of Life, published by 13 Hands Publications, which also contains new selections of his poetry. He dedicated the book to the memory of his friend and fellow actor Chris Penn, who starred with Madsen in Reservoir Dogs and Mulholland Falls.
Madsen has been married three times, his first wife was Jeannine Bisignano and his second was Georganne LaPiere. He married his third wife DeAnna Madsen in 1996. Madsen has five sons. One of them, Christian Madsen, is also an actor.
In 2002, Madsen was presented an award for his work with the Shriners Hospital for Children, and he gave his casting director friend Bruno Rosato a Porsche 928. In September 2009, Madsen announced his participation in the Love Ride 26 to help raise money for local charities and those less fortunate. Love Ride began in 1981 and has included celebrities Malcolm Forbes, Peter Fonda, and Larry Hagman with musical entertainment from Billy Idol, Bruce Springsteen, and others. The event was to have taken place on October 25, 2009 but was canceled two weeks before the event due to poor ticket sales and a decline in sponsorship and vendor support.
In 2009 Madsen borrowed $1 million from Quentin Tarantino and $25,000 from Pierce Brosnan after getting into debt. In 2012 Madsen was arrested for assaulting one of his sons after getting into an argument with him about smoking marijuana. In the same year he was arrested for drunk driving and sentenced to at least 30 days in a rehabilitation facility. In 2013, Madsen was ordered by the IRS to pay $400,000 of unpaid tax from the mid-nineties.
Madsen has made several films with Daryl Hannah. They include Kill Bill, The Last Days of Frankie the Fly, Shannon's Rainbow, Vice, Eldorado, as well as the film Garbage, in which they play friends called Daryl and Michael. Hannah took part in the 2007 fictional documentary Being Michael Madsen. Madsen was close friends with actor Chris Penn, and was a pallbearer at his funeral in 2006.
Madsen also has a line of hot sauces called American Badass.Won Independent Firecracker Award for his book of poetry "Burning In Paradise" (1998).
Red Hen Press awarded Madsen with the Lifetime Achievement Award for his Complete Poetic Works in 2006.
September 20, 2007 won "Best Actor" award at the 23rd Annual Boston Film Festival for his role as Sean Kelleher in Strength and Honour.
Madsen won the 9th Annual Malibu International Film Festival award on April 6, 2008.
Madsen won "Best Supporting Actor" (from movie Along the Roadside) at the IFS Film Festival in Beverly Hills in March 2013.