Walsh was born in Ogdensburg, New York, the son of Agnes Kathrine (née Sullivan) and Harry Maurice Walsh, Sr., a customs agent. After attending college at Clarkson University, he came to prominence in the 1978 crime drama, Straight Time, in which he played a sadistic parole officer. One of his most acclaimed roles was as Bryant in Ridley Scott's cult classic Blade Runner. Another notable role is as the double crossing private detective in Blood Simple (1984) for which he won the 1986 Independent Spirit Award for Best Male Lead. Walsh made occasional guest appearances on Home Improvement as Tim Allen's father-in-law. In Christmas with the Kranks, he played one of Allen's neighbors. He also appeared as Alex Lembeck, a motorcycle cop who appointed himself as Sandy Stockton's (Sandy Duncan) chaperone/ protector on The Sandy Duncan Show in 1972.
According to Roger Ebert's "Stanton-Walsh Rule" - "no movie featuring either Harry Dean Stanton or M. Emmet Walsh in a supporting role can be altogether bad". Ebert later conceded that this rule was broken by 1999's Wild Wild West.