He attended Lawrence Park Collegiate Institute and later studied English at the University of Toronto's Victoria College. After beginning his career in the theatre, McKellar was lured into the realm of Canadian cinema, where he has since become a ubiquitous presence.

McKellar made his first screen appearance in 1989 in Bruce McDonald's film Roadkill, for which he also wrote the screenplay. McKellar's work on Roadkill earned him Genie Award nominations for best supporting actor and best screenwriter, attracting the attention of many in Canada. Roadkill also won the Toronto-Citytv Award for best Canadian feature.

McKellar collaborated again with McDonald for his 1991 film Highway 61, writing the screenplay and playing the starring role as the barber Pokey Jones. Again McKellar's work solicited wide praise, earning him a second Genie nomination for best screenwriter and a nomination for best actor. McKellar's most recent collaboration with McDonald spawned the cult classic television series Twitch City, in which McKellar played the starring role of Curtis, a television addict and shut-in.

Since his entry into Canadian cinema, McKellar has also been involved in countless other projects. He appeared in Atom Egoyan's films The Adjuster (1991) and Exotica (1994), the latter of which earned him the Genie for best supporting actor. McKellar collaborated with François Girard, authoring the screenplays for his films Thirty Two Short Films About Glenn Gould (1992), and the Academy Award winning (Best Original Score) The Red Violin (1998), in which McKellar starred alongside Samuel L. Jackson. He also appeared alongside Jude Law and Jennifer Jason Leigh in David Cronenberg's 1999 film eXistenZ.

McKellar has emerged as a filmmaker in his own right; his directorial debut, Last Night (1998), garnered impressive critical acclaim, winning the Prix de la Jeunesse at the Cannes Film Festival and the Claude Jutra Award at the Genies. In 2004, McKellar's second film, Childstar, opened at the Toronto International Film Festival to enthusiastic reviews.

McKellar also stars in the animated sitcom Odd Job Jack as the titular hero, Jack Ryder. As of 2006 the show is in production of its fourth season on The Comedy Network.

McKellar has appeared in all three seasons of television's Slings & Arrows, as Darren Nichols, a pretentious theatre director. The show is co-written by Bob Martin, who collaborated with McKellar on the musical The Drowsy Chaperone. In 2006, he appeared in Ken Finkleman's miniseries At The Hotel. In June of 2006 he won the Tony Award for Best Book of a Musical for The Drowsy Chaperone. He received a Gemini Award nomination for his role as socialist politician Clarence Fines in Prairie Giant: The Tommy Douglas Story.

He hosted the CBC Radio One series High Definition.

He is currently at work on the screen adaptation of José Saramago's 1997 novel Blindness.