Banderas was born in Málaga, Andalucía, Spain to Jose Domínguez, a State Department worker, and Dona Ana Banderas, a teacher; he has a brother, Francisco. Banderas was raised a Catholic, but no longer follows the religion [1].

Banderas initially wanted to play soccer professionally, but his dream ended when he broke his foot at age 14. As a young man, he travelled penniless to Madrid, in order to make a career in the Spanish film industry.

Banderas first gained wide attention through a series of films directed by Pedro Almodóvar, between 1982 and 1990. He subsequently moved to the United States and began appearing in American films; some of his earlier roles there included the 1992 film, . He appeared in several major Hollywood releases in 1995, including a starring role in the Robert Rodriguez-directed film, .

For the majority of the 1990s and 2000s, Banderas remained in the United States and has starred in several notable box office successes, including playing the title role in the (1999), starring his wife Melanie Griffith.

In 2003, Banderas appeared, to great acclaim, in the Broadway revival of Maury Yeston's musical , playing the prime role originally played by the late Raul Julia. Banderas won both the Outer Critics Circle and Drama Desk awards, and was nominated for the Tony Award for best actor in a musical. His performance is preserved on the Broadway cast recording released by PS Classics.

Banderas is usually cited as being the most prominant Spanish actor in America. His voice role as Puss in Boots in made him popular on the family film circuit, and a spin-off movie starring his character is scheduled for release in 2008.

Banderas divorced his first wife, Ana Leza and, in 1996, married actress Melanie Griffith, whom he had met during the shooting of . They have a daughter, Stella del Carmen Banderas Griffith (also simply Stella Banderas), who appeared in the film "Crazy in Alabama", which Banderas directed.

Banderas has invested his movie earnings in businesses marketing Andalusian products, which he promotes in Spain and the USA. He is a fan of the Spanish soccer club Real Madrid.