Collins attended college at Eastern Michigan University from 1968–1971, where he played shortstop. In each of the four years he attended Eastern Michigan, Collins led the team in steals. He was on the Eastern Michigan team that won the NAIA national championship in 1971, at which he won the honor of Outstanding Defensive Player of the Tournament. Collins was inducted into the Eastern Michigan University Athletic Hall of Fame in 1994.
In 1971, Collins was drafted by the Pittsburgh Pirates. During a 10-year playing career, he played from 1970-1978 and in 1980 and 1984 in the Pittsburgh Pirates and Los Angeles Dodgers organizations. However, he never broke into the big leagues. Collins batted left-handed and threw right-handed and stood 5 ft 9 in (1.75 m) tall. He compiled a batting average of .255 in 671 games played.
In 1981, Collins began his managing career as pilot of the Dodgers' Class-A Lodi affiliate in the California League. In 1983, he managed the Albuquerque Dukes, the Dodgers' AAA affiliate also in winter to Mayos de Navojoa in the Mexican Pacific League, where in 1987, he won the PCL championship. He also led the Tigres de Licey to a victory in the 1984 Caribbean Series. He managed three years in Buffalo, the Pirates' AAA affiliate, winning 246 games in the process. He was promoted to bullpen coach for the Pirates in 1992, where he coached until the end of the 1993 season. In honor of his achievements in Buffalo, he was inducted into the Buffalo Baseball Hall of Fame in 1992. Terry is also a member of the Albuquerque Baseball Hall of Fame.
After the 1993 season, the Houston Astros fired manager Art Howe because the owner did not favor Howe's "deliberate style." Astros General Manager Bob Watson replaced him with Collins, who never had a losing season in his three years there. The Astros finished second all three years. He was dismissed at the end of the 1996 season, after the Astros suffered a late-season collapse. In 1995, Collins was a coach at the All-Star Game. He finished his Astros career with a 224–197 record.
Baseball analyst Joe Morgan suggests that Collins was partly to blame for the Astros failure to make the playoffs. Morgan wrote in 1999:
Adversity is part of baseball; if a manager can't cope with it his team will suffer. Terry Collins, the skipper of the Anaheim Angels learned this lesson when he was with Houston. The Astros were a talented team when Collins was there (1994–96). They finished second three times, but failed to make the playoffs because their manager exerted too much pressure on them. He was so uptight, his players thought each pitch was life-or-death. It wasn't anything Terry said; it was his demeanor. Collins was edgy in the dugout during games, always looking like someone who was just waiting for disaster to strike. At the moment anything actually went wrong you could smell the panic in him. Players picked up on that. To alleviate the tension the manager was bringing to the clubhouse, they put added pressure on themselves to perform well, which invariably choked off their natural abilities so that they can't play their best. It's no coincidence that the Astros became a post-season participant once Houston replaced Collins with Larry Dierker. I don't know if Larry knows more about baseball than Collins, but he does have a laid-back attitude that immediately puts his players at ease. Dierker kept the pressure off the team by reminding them that while the goal of winning is serious, the game is still essentially supposed to be fun. (By the way, I have been watching Collins since he joined the Angels and he's a much more laid-back skipper. When I complimented him on this change, he said former Angel infielder-outfielder Tony Phillips had spoken to him about relaxing more and that it has really made an impression.)
Less than a month after being dismissed by the Astros, Collins was hired as manager of the Anaheim Angels for the 1997 season. His first two years with the Angels also produced winning records and second-place finishes. In 1999, the Angels were hampered by injuries and Collins resigned with 29 games left in the season. He apparently received a vote of confidence from the front office, but the players had petitioned GM Bill Bavasi to fire him. He finished his Angels career with a 220–237 record.
At the end of the 2006 season, Collins signed a two-year deal to manage the Orix Buffaloes of the Pacific League in Japan. Terry resigned as manager of the Buffaloes on May 21, 2008 after a 7–3 inter-league loss to the Hanshin Tigers. Orix were in 5th place in the Pacific League with a 21–28 record, despite investments in players such as Alex Cabrera in the prior off-season. Injuries to the Buffaloes pitching staff certainly didn't help Collins' situation. However, the Buffaloes bounced back and finished second by the end of the season.
Collins became the manager of the China national baseball team at the end of the year, in time for the 2009 World Baseball Classic.
On July 20, 2009, the Duluth Huskies of the Northwoods League announced that Collins would manage the team for the rest of the season after firing their field manager a few days prior.
Collins spent the 2010 season as the minor-league field coordinator for the New York Mets organization. Collins was introduced as Mets manager on November 23, 2010, signing a two-year deal.
Collins wears number 10 to honor his managing mentor and friend Jim Leyland of the Detroit Tigers. Collins served on Leyland's coaching staff when he was manager of the Pittsburgh Pirates in 1992 and 1993.
On September 27, 2011, the Mets announced that they would pick up Collins' option for the 2013 season.
In 2012, after the Mets 46–40 record at the All-Star Break, Tony La Russa selected Collins as one of his coaches to the 2012 All-Star Game. In 2013, Bruce Bochy selected Collins as one of his coaches to the 2013 All-Star Game at Citi Field.
At the end of September 2013, Collins agreed to a two-year extension with the Mets with a club option for 2016. When Jim Leyland retired in October 2013, Collins became the oldest active manager in Major League Baseball.
On June 16, 2015, Collins won his 340th game as Mets manager, passing Gil Hodges for the third most in franchise history. On September 26, 2015, the Mets defeated the Cincinnati Reds 10–2 to clinch the National League East. It was the first time Collins ever clinched a playoff berth as a manager. On October 15, 2015, the Mets defeated the Los Angeles Dodgers to advance to Collins's first ever NLCS appearance. On October 21, 2015, the Mets defeated the Chicago Cubs to advance to the 2015 World Series versus the Kansas City Royals. On November 2, the Royals won game 5 in Citi Field to defeat the Mets and win the World Series, 4 games to 1. Collins made the decision to leave starter Matt Harvey in the game for the ninth inning with the Mets holding a 2-0 lead. Harvey gave up 2 earned runs in the inning to allow the Royals to tie the game, leading to questions about Collins's strategy.
In 2015, Collins won the National League Sporting News Manager of the Year Award.
Collins recorded his 468th loss as Mets manager on August 3, 2016 at New Yankee Stadium, making him the losingest manager in Mets history ahead of Bobby Valentine.As of games played on August 21, 2017.