Buscemi was born in Brooklyn, New York to John Buscemi, an Italian American Korean War veteran, and an Irish American mother. He was a New York City firefighter from 1980 to 1984. He graduated from Valley Stream Central High School in 1976.

His first lead role was opposite Richard Ganoug in Parting Glances (1986). He is an associate member of the experimental theater company The Wooster Group.

Buscemi's memorable roles include Mr. Pink in Reservoir Dogs, Rockhound in Armageddon, Donny in The Big Lebowski, Carl Showalter in Fargo, and the voice of Randall in Monsters, Inc.. Although usually a supporting actor, he has had critical success as a lead actor, particularly his role as Seymour in Ghost World.

Buscemi normally plays characters that are neurotic and paranoid. He often appears in films by the Coen Brothers, usually dying in a grisly or unexpected manner (such as being shot in the face with a handgun or suffering a heart attack during a fistfight).

In April 2001, while shooting the film Domestic Disturbance in Wilmington, North Carolina, Buscemi was stabbed while intervening into a barfight between his good friend Vince Vaughn, screenwriter Scott Rosenberg, and a local man, Timothy Fogerty, who allegedly instigated the brawl.

In 2003, he made a celebrity guest appearance as himself on the long-running FOX television show The Simpsons.

In 2004, Buscemi joined the cast of The Sopranos as Tony Soprano's cousin and childhood friend, Tony Blundetto. Buscemi had previously been involved with the show, directing the third season episode "Pine Barrens", which is a fan favorite. He recently appeared in the third episode of season six, as a doorman at a country club in a dream of Tony Soprano's. He also returned as a director to the show, directing the fifth episode of season six.

In addition to acting, Buscemi also has a career as a director. He currently is directing the feature film, Interview, in which he also stars. Previous to this, he has directed Trees Lounge in 1996, Animal Factory 2000, Lonesome Jim 2005. In addition to directing feature films, he has also directed episodes of Homicide: Life on the Street and The Sopranos. Also, he directed two episodes of the HBO prison-drama series Oz, "U.S. Male," and "Cuts Like A Knife."

The day after the September 11, 2001 attacks in New York, Buscemi went to his old fire station to volunteer, working twelve hour shifts at "Ground Zero" for a week, searching for survivors. He avoided the cameras and worked anonymously.

Steve Buscemi currently lives in Brooklyn.