Keaton was born Michael John Douglas on September 5, 1951, to a Scots-Irish family in Coraopolis, Pennsylvania (near Pittsburgh), and studied speech for two years at Kent State, before dropping out and moving to Pittsburgh. An unsuccessful attempt at stand-up comedy led Keaton to working as a TV cameraman in a cable station, and he came to realize he wanted to work in front of the cameras.

Keaton left Pittsburgh and moved to Los Angeles to begin auditioning for various TV parts. He first appeared on TV in several episodes of Mister Rogers' Neighborhood (1975), and cropped up in other popular TV shows including Maude (1977) and The Mary Tyler Moore Hour (1979). Around this time Keaton decided to use an alternative surname to remove confusion with well known actor Michael Douglas, and after reading an article on actress Diane Keaton, he decided on "Michael Keaton". His next key break was scoring a co-lead alongside James Belushi in the short lived comedy series Working Stiffs (1979), which showcased his comedic talent and got him into the casting for the co-lead in 'Night Shift' (1982). His role as the hilariously fast-talking schemer Bill "Blaze" Blazejowski alongside nerdish morgue attendant Henry Winkler earned Keaton some critical acclaim, and he scored leads in the subsequent comedy hits Mr. Mom (1982) , Johnny Dangerously, and Gung Ho (1986). His role as the title character in the 1988 Tim Burton horror-comedy Beetlejuice, which starred Alec Baldwin, Geena Davis, and Winona Ryder, earned Keaton widespread acclaim and boosted him to the A-list.

Keaton's career was given another major boost when in 1989 he was again cast by Burton, this time as millionaire playboy and crime-fighter Bruce Wayne in the big budget film Batman. After the Keaton casting, Warner Bros. received thousands of letters of complaint by fans commenting that the comedic Keaton was the wrong choice for Gotham City's creature of the night. However, their fears were proved wrong when Keaton turned in a widely-acclaimed performance.

Keen to diversify his work and take on different types of characters, Keaton next appeared as a psychotic tenant in Pacific Heights, and as a hard working cop in One Good Cop, both relative flops, but he returned to wear the black cape and cowl again in Batman Returns (1992).

He was prepared to return for Batman Forever (1995), even going so far as to show up for costume fitting. However, Burton (slated to executive produce) and Keaton both left the series after being dissatisfied with the campy screenplay the new director, Joel Schumacher, approved. According to the A&E Biography episode on Michael Keaton, Warner Brothers offered him 35 million dollars (one of the highest salaries offered to an actor at the time) but Keaton steadfastly refused. In a marked contrast to their initial reaction, many fans complaining about those films often demanded that not only that Tim Burton be rehired as director but that Keaton play Batman again.

He remained in demand during the 1990s, appearing in a wide range of films including the star-studded Shakespearian Much Ado About Nothing (1993), another Ron Howard comedy The Paper (1994), with Andie MacDowell in Multiplicity (1996), as Elmore Leonard character Agent Ray Nicolette in Jackie Brown (1997) and Out of Sight (1998), and in the thriller Desperate Measures (1998). Since 2000, Keaton has appeared in several productions with mixed success including Live From Baghdad (2002), White Noise (2005), First Daughter (2004), and Herbie: Fully Loaded with Lindsay Lohan (2005). While he continues to receive good notices from the critics (particularly for Jackie Brown), he has not been able to approach the box-office success of the Batman series.

As of 2006, he is starring in a new independent film called Game 6, a semi-thriller based around the famous baseball game of the same name, and has just been announced to be the lead in Media 8 Entertainment's upcoming film Reaper, a supernatural thriller, expected for a 2007 release.