John Gielgud was born in South Kensington in London to Kate Terry and Frank Gielgud. He was of theatrical lineage on his mother's side, being the grandson of actress Kate Terry and the great nephew of Dame Ellen Terry, as well as of Marion Terry, Fred Terry, and all their actor siblings.

Gielgud's Catholic father, Franciszek Giełgud, born 1880, was a descendant of a Polish–Lithuanian noble family residing at Gelgaudiškis manor dating back to the Grand Duchy of Lithuania (now a town in Marijampolė County, Lithuania).

In his autobiography, Gielgud states repeatedly and clearly that his father was Polish Catholic. However in the same autobiography, 'John Gielgud: The Authorized Biography', he mentions Gelgaudiškis as being his ancestral home from where his family and their surname originated.

His elder brother Val Gielgud came to be a pioneering influence in BBC Radio. His niece Maina Gielgud is a dancer and one time artistic director of The Australian Ballet and the Royal Danish Ballet.

After Hillside Preparatory School in Godalming, Surrey, and Westminster School, where he gained a King's Scholarship, Gielgud trained briefly at RADA and understudied Noel Coward in Coward's The Vortex at the Everyman Theatre in Hampstead under the direction of Norman MacDermott (1890–1977). He had his initial success as a stage actor in classical roles, first winning stardom during a successful two seasons at the Old Vic Theatre from 1929 to 1931 where his performances as Richard II and Hamlet were particularly acclaimed, the latter being the first Old Vic production to be transferred to the West End for a run. He returned to the role of Hamlet in a famous production under his own direction in 1934 at the New Theatre in the West End. He was hailed as a Broadway star in Guthrie McClintic's production in which Lillian Gish played Ophelia in 1936. (The production's popularity was assisted when a rival staging featuring film star Leslie Howard opened shortly afterward and was critically denounced in comparison to Gielgud's. Gielgud's production broke the long-run record for a Broadway "Hamlet.") There followed a 1939 production that Gielgud again directed at the Lyceum Theatre, historic for having been the professional home for Henry Irving's company. This was the last production to play the Lyceum until 50 years later when it was restored to host, among other shows, the hit musical The Lion King. Gielgud's Hamlet would be later taken to Elsinore Castle in Denmark (the actual setting of the play), there was a 1944 production directed by George Rylands, and finally a 1945 production that toured the Far East under Gielgud's own direction. In his later years, Gielgud would play the Ghost of Hamlet's Father in productions of the play, first to Richard Burton's Melancholy Dane on the Broadway stage which Gielgud directed in 1964, then on television with Richard Chamberlain, and finally in a radio production starring Gielgud's protégé Kenneth Branagh.

Gielgud had triumphs in many other plays, notably his greatest popular success Richard of Bordeaux (1933) (a romantic version of the story of Richard II), The Importance of Being Earnest which he first performed at the Lyric Hammersmith in 1930 and which would remain in his repertory until 1947, and a legendary production of Romeo and Juliet (1935) which Gielgud directed and alternated the roles of Romeo and Mercutio with a young Laurence Olivier in his first professional Shakespearean leading role. Olivier's performance won him an engagement as the leading man of the Old Vic Theatre the following season, starting his career as a classical actor, but he was said to have resented Gielgud's direction and developed a wary relationship with Gielgud which resulted in Olivier turning down Gielgud's request to play the Chorus in Olivier's film of Henry V and later doing his best to block Gielgud from appearing at the Royal National Theatre when Olivier was its director (Croall 2002).

Gielgud had hoped to stay in America after his Broadway performance as Hamlet in 1936 to play Richard II in New York, but director Guthrie McClintic was so certain that the production would fail in the United States that Gielgud gave up the idea (and was dismayed when Maurice Evans had a legendary success in the play on Broadway after Gielgud gave him his blessing to mount it when he decided not to).

However much Gielgud may have wished to stay in America, his return to London in 1937 had an enormous influence on the development of English Theatre. In 1937/38, he brought his celebrity and talent to bear in producing a season of plays at the Queen's Theatre, presenting the aforementioned Richard II, The School for Scandal, Three Sisters, and The Merchant of Venice with a permanent company that included himself, Peggy Ashcroft, Michael Redgrave and Alec Guinness. Although not always acknowledged for this achievement, Gielgud set a precedent in establishing a company of actors gathered together to present classics. This effort proved it could be done and shaped the development of such future theatrical institutions as the Royal Shakespeare Company and the Royal National Theatre. Gielgud acted in all four productions and directed the two Shakespeare plays, while Tyrone Guthrie directed The School for Scandal and Michael Saint-Denis staged Three Sisters. From Sheridan Morley's authorized biography: "Accustomed as we have now become to...the National Theatre and the Royal Shakespeare Company, it is almost impossible to conceive how revolutionary John's idea was for the West End of 1937, where there had simply been nothing like it since the heyday of Henry Irving and the actor-managers more than fifty years earlier." Laurence Olivier said that Gielgud's performance in The School for Scandal was "the best light comedy performance I have ever seen - or ever shall!" and considered his Shylock to be among his greatest impersonations, but the greatest success of the season was the production of Three Sisters. That production went far toward Gielgud's successful effort to establish Chekhov's's viability on the English-speaking stage. Gielgud's own performance as Vershinin, along with his past successes as Treplev in The Seagull (1929 and 1936), and his later work in The Cherry Orchard (1954), and Ivanov (1965) were part of that Chekhovian legacy.

It would always be, however, for his Shakespearean work that Gielgud would be best known. In addition to Hamlet which he played over 500 times in six productions, he gave what some consider definitive performances in The Tempest (as Prospero) in four productions (and in the 1991 film Prospero's Books), as well as in other roles - Richard II in three productions, Benedick in Much Ado About Nothing which he first played in 1930 and revived throughout the 1950s, Macbeth and Oberon in A Midsummer Night's Dream twice, Romeo three times, and King Lear four times (as well as taking on the part for a final time in a radio broadcast at the age of 90). He also had triumphs as Malvolio in Twelfth Night (1931), Shylock in The Merchant of Venice (1937), Angelo in Measure for Measure (1950), Cassius in Julius Caesar (1950) (which he immortalized in the 1953 film), Leontes in The Winter's Tale (1951), and Cardinal Wolsey in Henry VIII (1959) (although his 1960 performance as Othello was not a success). It became rumored that Gielgud also provided the voice for the uncredited role of the Ghost of Hamlet's Father in Laurence Olivier's 1948 film version, but the voice was actually that of Olivier, electronically distorted. Gielgud did voice the Ghost in both the stage and film version of the Richard Burton Hamlet, which he directed in 1964, and in the 1970 Hallmark Hall of Fame presentation starring Richard Chamberlain.

Gielgud's crowning achievement, many believe, was Ages of Man, his one-man recital of Shakespearean excerpts which he performed throughout the 1950s and 1960s, winning a Tony Award for the Broadway production, a Grammy Award for his recording of the piece, and an Emmy Award for producer David Susskind for the 1966 telecast on CBS. Gielgud made his final Shakespearean appearance on stage in 1977 in the title role of John Schlesinger's production of Julius Caesar at the Royal National Theatre. He also made a recording of many of Shakespeare's sonnets in 1963. Among his non-Shakespearean Renaissance roles, his Ferdinand in John Webster's The Duchess of Malfi was well-known.