He first became known for directing almost all the music videos by the pop group ABBA, but came to international attention with his 1985 feature film My Life as a Dog, for which he was nominated for an Academy Award for Best Director.

[9] He made his directorial debut in 1973, directing the comedy series Pappas pojkar for Swedish TV.

His 2001 film The Shipping News was adapted from a Pulitzer Prize-winning novel by E. Annie Proulx and starred Kevin Spacey, Judi Dench, Julianne Moore, and Cate Blanchett.

His 2011 film Salmon Fishing in the Yemen, based on the 2007 novel of the same name by Paul Torday and starred Ewan McGregor and Emily Blunt.

[10] Hallström directed and executive produced the 2024 American-Icelandic Nordic Noir thriller television series The Darkness, starring his wife Lena Olin, who has collaborated with him on other films.