Ferguson was born in Glasgow, and raised in nearby Cumbernauld. He lived in London for eight years, where he was a drummer for punk rock bands. He returned to Scotland, where he was a bartender and bouncer. He also lived in New York City, where his uncle, James, lived.

Ferguson became a highly regarded comic in the UK, appearing in the alternative comedy circuit under the stage-name Bing Hitler. After enjoying success at the Edinburgh Festival, Ferguson moved to Los Angeles California in 1995. Ferguson was part of the cast for the short-term 1995 ABC comedy "Maybe This Time", which starred Betty White and Marie Osmond.

He is best known in the U.S. for his role on the ABC comedy The Drew Carey Show, where he played Nigel Wick, Drew Carey's boss, from 1996 to 2003. Of his over-the-top English accent on the series, Ferguson noted that plenty of English actors had used bad Scottish accents in the past, so it was time for a Scottish actor to use a bad English accent. However, Ferguson complimented actor Mike Myers for having a great Scottish accent.

Ferguson is the writer/co-writer and actor of movies including The Big Tease, Saving Grace, and I'll Be There, which he also directed.

In December 2004, it was announced that Ferguson would be the successor to Craig Kilborn on CBS's The Late Late Show. Ferguson's first show aired on January 4, 2005, with reasonably successful results since then. Initially, Ferguson opened each show with a scripted monologue and prepared jokes, as done on most late night talk shows.