McMahon played college football for the BYU Cougars, winning the Davey O'Brien Award and the Sammy Baugh Trophy as a senior.

Following his seven years in Chicago, McMahon played for the San Diego Chargers, Philadelphia Eagles, Minnesota Vikings, Arizona Cardinals, and Green Bay Packers.

He spent his final seasons in a backup role, including on the Packers team that won Super Bowl XXXI, also over the Patriots.

McMahon watched from the sidelines as Wilson set nine NCAA records, tied two others, and became the first BYU player to earn consensus first-team All-American honors; he finished third in Heisman Trophy balloting.

With Wilson graduated and in the NFL with the Oakland Raiders, McMahon beat out Royce Bybee to claim the starting quarterback position in 1980.

In the Holiday Bowl, the Cougars faced an SMU team led by star running backs Craig James and Eric Dickerson, and the Mustangs built a 45–25 lead over BYU with just four minutes left in the game.

He promptly guided BYU's offense to three quick touchdowns, including a 41-yard Hail Mary pass to Clay Brown to win the game[4] as time expired.

He earned Sports Illustrated's Player of the Week award after his performance against Colorado State, in which he tied a school record with seven touchdown passes.

[6] In September 2010, McMahon announced he would complete his coursework at BYU, which would qualify him for induction into the Brigham Young University Athletics Hall of Fame.

On October 2, 2014, after completing his degree in communications, McMahon was inducted into the BYU Athletics Hall of Fame as part of the 2014 class.

McMahon, thrilled to be free from what he considered a restrictive culture at BYU, strolled into his first public function with the Bears holding a cold beer in his hand.

McMahon was to find the atmosphere in Chicago almost as challenging as that at Brigham Young, and he would lock horns with Ditka routinely during his seven years with the Bears.

McMahon, a rollout passer, explained that coaching in his youth had taught him to square his shoulders to the direction he wanted to throw the football, and he was thus able to execute passes with tight spirals and a high degree of accuracy when running to either his left or his right.

The Bears finished the strike-shortened season at 3–6, and McMahon was named NFC Offensive Rookie of the Year, losing the league-wide honor to Marcus Allen.

He became a frequent scorer in goal-line situations, after the dying Halas instructed Ditka to make the quarterback sneak a bigger part of the Bears' offense.

He appeared in a rap record made by the team, "The Super Bowl Shuffle", in which he proclaimed, "I'm the punky QB known as McMahon."

In week 12 of the 1986 NFL regular season, McMahon was playing against the Green Bay Packers, while dealing with an existing rotator cuff injury to his right shoulder.

After throwing a third down interception and at least two seconds after his pass was thrown, Green Bay nose tackle Charles Martin grabbed McMahon from behind and body-slammed him to the turf, exacerbating his existing rotator cuff injury.

Without McMahon, and despite finishing tied for the league's best record at 14–2, the Bears were unable to defend their Super Bowl championship and lost in the Divisional Playoff round to the Washington Redskins.

McMahon battled injuries for the rest of his career, although at one point between the 1984 and 1987 seasons, he won 22 consecutive regular-season (25 including playoffs and the Super Bowl) starts, the longest "regular season winning streak" by an NFL quarterback at the time, now held by Peyton Manning, who won 23 in 2008 to 2009 (but lost a wildcard playoff game to the Chargers during his "winning streak").

His main offensive weapon in Walter Payton had retired and McMahon publicly expressed his desire to win a Super Bowl again.

He also fell out of favor with head coach Mike Ditka, and after spending his first seven seasons in the league with Chicago, McMahon was traded to the San Diego Chargers.

However, McMahon again found himself in trouble when he fell out of favor with his coach, Dan Henning, his teammates, and the team's front office staff.

He was benched for the final four games in favor of Billy Joe Tolliver and finished the year with 2,132 yards, 10 touchdowns and 10 interceptions.

McMahon caused some controversy when he showed up to the Packers' reception at the White House wearing his Bears jersey, due to the rivalry between the two teams.

"[18] Along with six other retired professional football players, McMahon filed a class action lawsuit against the NFL in August 2011, citing the league's negligence and misconduct in its handling of concussion-related injuries.

McMahon expressed skepticism toward the effectiveness of NFL-sanctioned treatments for head and neck injuries, believing that NFL officials prioritize corporate interests over player well-being.

"[32] In August 2020, a documentary entitled Mad Mac: The Memory Of Jim McMahon by director CJ Wallis began shooting.

In response, McMahon decided to help bring attention to Juvenile Diabetes by wearing a headband simply stating "JDF Cure", before switching to one stating "POW-MIA", and finally one with the word "Pluto", the nickname of his close friend and favorite collegiate receiving target, former BYU wide receiver Danny Plater, who was afflicted with a brain tumor.

[36] On the field he was among the first to wear a helmet fitted with a tinted plastic visor covering the eyes, leading to nicknames like "Darth Vader".