Cheema was born into a Sikh family in Baryar Village, in a remote section of the Gurdaspur district in Punjab, India. He received a Bachelor of Arts degree in medicine and surgery from Punjab University in 1977, and worked as a clinical instructor for the next two years. Cheema moved to Canada in 1979, and he spent time working in Newfoundland and Saskatchewan before starting a family practice in rural Manitoba. He later practiced in Winnipeg.
In the Manitoba general election of 1988, Cheema was elected as a Liberal in the northeastern Winnipeg riding of Kildonan. The Liberals went from one to twenty seats in the Manitoba legislature in this election, winning several Winnipeg seats from the governing New Democratic Party (NDP). Cheema defeated Progressive Conservative candidate John Baluta by 585, with NDP incumbent Marty Dolin finishing third. The Progressive Conservatives came out of the election with a minority government, and Cheema became a member of the official opposition. Cheema increased his margin of victory in the 1990 provincial election, but the Liberal Party fell to seven seats and third-party status. He resigned his seat on June 17, 1993.
Soon afterwards, he opened a family practice in Surrey, British Columbia. Cheema became involved in several community activities in British Columbia, including acting as chair of the 1998 British Columbia Games for Athletes with Disabilities' medical section.
Although the British Columbia Liberal Party is usually regarded as significantly more right-wing than the Manitoba party, Cheema nevertheless ran as a BC Liberal in that province's 1996 provincial election. He was unsuccessful, finishing 380 votes behind New Democratic Party candidate Ian Waddell in Vancouver-Fraserview.
The BC New Democrats experienced a sharp decline in their popularity between 1996 and 2001, and the provincial Liberals were elected in a landslide in that year's provincial election. Cheema had no difficulty being elected in Surrey-Panorama Ridge, defeating NDP candidate Bruce Ralston by over 6,000 votes. On June 5, 2001, he was appointed Minister of State for Mental Health Services. On January 20, 2004, he was appointed Minister of State for Immigration and Multicultural Services.