Born in Pittsburgh, Pennsylvania, he began a Broadway career in 1912 and a Hollywood career in 1922. His first starring role was as Philo Vance in 1929's The Canary Murder Case. He followed this up with the Vance role in The Kennel Murder Case in 1933. In the same year, he was divorced from his second wife, the actress Carole Lombard, who went on to marry Clark Gable.
Powell's most famous role was that of Nick Charles in several "Thin Man" films, beginning with The Thin Man in 1934. In 1935, he starred with Jean Harlow in Reckless, and they became engaged. She died before they could marry. He became so distraught, he went into semi-seclusion, taking fewer roles, but did re-marry in 1940. His career slowed considerably in the late 1940s, and his last film was Mister Roberts in 1955.
Powell died in Palm Springs, California thirty years after his retirement.