He earned the Tony Award for Best Featured Actor in a Play for his performance in the 1986 Broadway revival of John Guare's The House of Blue Leaves, and went on to achieve wider recognition for his roles in the films Suspect and Moonstruck (both 1987).

After the war, the family moved back to Manchester, where Mahoney grew up in the suburb of Withington and discovered acting at the Stretford Children's Theatre.

[6][7] Mahoney moved to the United States aged 18 in 1959 when his older sister Vera (a war bride living in rural Illinois, where he had visited in 1951) agreed to sponsor him.

[17] Mahoney won Broadway's Tony Award for Best Featured Actor in a Play in 1986 for his performance in John Guare's The House of Blue Leaves.

[18] Mahoney's first major film roles both came in 1987, in Barry Levinson's Tin Men and in Peter Yates' Suspect, a courtroom drama/mystery starring Cher, Dennis Quaid, and Liam Neeson.

He portrayed Secret Service Director Sam Campagna in the Wolfgang Petersen directed drama In the Line of Fire (1993), Grant Gubler in Ben Stiller's romance film Reality Bites (1994), environmental lobbyist Leo Solomon in Rob Reiner's political romance film The American President (1995) and John Shaughnessy in the legal mystery thriller Primal Fear (1996).

[21] Mahoney also played a pivotal gay role in Greg Berlanti's 2000 GLAAD Media Award-winning film The Broken Hearts Club: A Romantic Comedy.

NBC executives held Mahoney in such high esteem that Warren Littlefield declared he was pre-approved when the Frasier creative team suggested casting him as the father.

[citation needed] In 2007, Mahoney provided the voice of Dr. Robert Terwilliger, Sr. (Sideshow Bob's father) in The Simpsons episode "Funeral for a Fiend".

[citation needed] Mahoney co-starred as the Old Man in the Broadway revival of Prelude to a Kiss at the American Airlines Theater in a limited-run engagement running from previews on February 17, 2007, through to April 29, 2007.

His character, referred to only as "Management," is a senior intelligence agency official who is the apparent main mover of the conspiracy which blacklisted Michael Westen.

[26][27] Mahoney joined the cast of In Treatment for the series' second season (2009) as a frenetic CEO who is overwhelmed by his personal and professional responsibilities and experiences chronic physical anxiety attacks.

[citation needed] Beginning in April 2011, Mahoney began rehearsing The Outgoing Tide, a new play by Bruce Graham at Northlight Theatre in Skokie, Illinois (suburban Chicago).

Mahoney was a featured ensemble cast member in The Birthday Party, playing in Chicago's Steppenwolf Theatre from January 24 to April 28, 2013.

Mahoney would also say prayers upon waking up and before going to sleep daily, and would repeatedly pray "Dear God, please help me to treat everybody – including myself – with love, respect, and dignity.