He is best known for writing and directing the 2006 dramatic thriller Das Leben der Anderen (The Lives of Others), which won the Academy Award for Best Foreign Language Film.

He grew up in New York City, Brussels, Frankfurt, and West Berlin and is fluent in English, German, French, Russian, and Italian.

[8] In 1996, he won a directing apprenticeship with Richard Attenborough on In Love and War, and then went to study at the Fiction Directing Class of the Hochschule für Fernsehen und Film München (University of Television and Film Munich), Germany, alma mater of directors as diverse as Wim Wenders, Roland Emmerich and Maren Ade, who was Donnersmarck's classmate.

His first short film, Dobermann (which he wrote, produced, directed and edited), broke the school record for the number of awards won by a student production.

Donnersmarck re-wrote, directed and completed his sophomore work in under eleven months, telling Charlie Rose he had wanted a break from writing a dark screenplay about suicide.

The film opened to middling number, but eventually ended up grossing US$278.3 million at the worldwide box office,[15] prompting The Hollywood Reporter belatedly to proclaim it an "international hit".

It became one of less than two dozen German language features since the end of World War II to surpass one million dollars at the North American box office.

[23] After meeting him at the Davos World Economic Forum, Jay Nordlinger, writing for National Review, described Donnersmarck as "one of the most impressive people on the planet".

The university named 100 streets in Oxford's historical centre after these graduates, with Upper Oxpens Road renamed for Donnersmarck.