He was born at Melide on the Lake Lugano and died at Naples. He went to Rome before the death of Michelangelo. He won the confidence of Cardinal Montalto, later Pope Sixtus V, who entrusted him in 1584 with the erection of the Cappella del Presepio (Chapel of the Manger) in Basilica di Santa Maria Maggiore, a powerful domical building over a Greek cross. It is a marvellously well-balanced structure, notwithstanding the profusion of detail and overloading of rich ornamentation, which in no way interferes with the main architectural scheme. It is crowned by a dome in the early style of S. Mario at Montepulciano.
For the same patron, he constructed the Palazzo Montalto near Santa Maria Maggiore, with its skilful distribution of masses and tied decorative scheme of reliefs and festoons, impressive because of the dexterity with which the artist adapted the plan to the site at his disposal. After his accession as Sixtus V, he appointed Fontana architect of St. Peter's, bestowing upon him, among other distinctions, the title of Knight of the Golden Spur. He added the lantern to the dome of St. Peter's and proposed the prolongation of the interior in a well-defined nave.
Of more importance were the alterations he made in Basilica di San Giovanni in Laterano (c.1586), where he introduced into the loggia of the north facade an imposing double arcade of wide span and ample sweep, and probably added the two-story portico the Scala Santa. This predilection for arcades as essential features of an architectural scheme was brought out in the fountains designed by Domenico and his brother Giovanni, e.g. the Fontana dell'Acqua Paola, or the Fontana di Termini planned along the same lines.
Among profane buildings his strong restrained style, with its suggestion of the School of Vignola, is best exemplified in the Lateran Palace (begun in 1586), in which the vigorous application of sound structural principles and a power of co-ordination are undeniable, but also the utter lack of imagination and barren monotony of style. It was characteristic of him to remain satisfied with a single solution to an architectural problem, as shown in the fact that he reapplied the motif of the Lateran Palace in the later part of the Vatican containing the present papal residence, and in the additions to the Quirinal Palace.
Fontana also designed the transverse arms separating the courts of the Vatican. In 1586 he erected the 327 ton obelisk in the Square of St. Peter's. This feat of engineering took the concerted effort of 900 men, 75 horses and countless pulleys and meters of rope.
He gives a detailed account of it in Della transportatione dell'obelisco Vaticano e delle fabriche di Sisto V (Rome, 1590) The astronomer Ignazio Danti is known to have assisted Fontana in this work.
Fontana also used his knowledge of statics, which aroused universal astonishment at the time, in the erection of three other ancient obelisks on the Piazza del Popolo, Piazza di S. Maria Maggiore, and Piazza di S. Giovanni in Laterano.
After his patron's death, he continued for some time in the service of his successor, Pope Clement VIII. Soon, however, dissatisfaction with his style, envy, and the charge that he had misappropriated public moneys, drove him to Naples where, in addition to designing canals, he erected the Palazzo Reale.
He died in 1607, and was buried in the church of Sant'Anna dei Lombardi.
Domenico's brother Giovanni Fontana was also an architect.