McCarthy began his playing career at Barnsley in 1977, and he later had spells at Manchester City, Celtic, Lyon, and finally Millwall, retiring in 1992.

Born and raised in England, he represented the Republic of Ireland, for whom he earned 57 caps and played at UEFA Euro 1988 and the 1990 FIFA World Cup.

The Maine Road club won promotion in McCarthy's first full season and he finally had the chance to play at the highest level.

[8] He made his Irish international debut in a goalless friendly against Poland on 23 May 1984, McCarthy soon became a first-choice player and featured in all three of Ireland's games at UEFA Euro 1988.

[7] In total, McCarthy won 57 caps for the Republic of Ireland; scoring two goals, one against Yugoslavia in April 1988,[11] the other against the United States in May 1992.

[citation needed] His loan signings of the underachieving Russian internationals Sergei Yuran and Vassili Kulkov from Spartak Moscow, who each received a £150,000 signing-on fee and were being paid five times the wage of the rest of the first team, would later be cited [by whom?]

[15] Before the tournament, McCarthy was involved in a very public and bitter spat with star player Roy Keane, who was sent home the day before it began.

Many in Ireland sided with Keane – particularly following a televised interview in which details of poor preparation were revealed – and demanded McCarthy's resignation both during and after the tournament.

An independent inquiry into the organisation's handling of the squad's preparation later commissioned by the Football Association of Ireland created a damning report, leading to general secretary Brendan Menton tendering his resignation.

[19] On 12 March 2003, McCarthy was appointed manager of struggling Sunderland as an immediate replacement for Howard Wilkinson, who was sacked after six successive Premiership defeats left the club facing near-certain relegation.

[23] On 21 July 2006, McCarthy was appointed manager at Championship side Wolverhampton Wanderers, replacing Glenn Hoddle who had resigned a fortnight earlier.

He signed a 12-month rolling contract[24] The team managed to make the promotion play-offs in his first season, where they lost out to local rivals West Bromwich Albion over two legs, losing 3–2 at Molineux and 1–0 at The Hawthorns.

[29] After maintaining top spot since October, McCarthy's Wolves secured promotion to the Premier League by beating QPR 1–0 on 18 April 2009.

[35] This gave McCarthy the distinction of being the first Wolves manager in thirty years to maintain the club's top flight position for two successive seasons.

McCarthy guided Ipswich past Burnley on 10 November – the first home win since March after a late DJ Campbell winner.

[41] With a win against Nottingham Forest in late November, his sixth game in charge, McCarthy had successfully guided Ipswich out of the relegation zone.

[43] The following season he led the club to their first appearance in the Championship playoffs in ten years with a sixth-placed finish, before losing out to rivals Norwich City in the semi-finals.

On 29 March 2018, Ipswich Town announced that McCarthy would be leaving the club at the end of the 2017–18 season on the expiry of his contract, along with assistant manager Terry Connor, after talks with owner Marcus Evans.

[52][53] In June 2019, the national team drew 1–1 away to Denmark, before defeating Gibraltar once again, this time by 2–0, at the Aviva Stadium; four days later, McCarthy guided them to the top the Group D table, having taken ten points after four games.

[56] However, a 0–0 draw in Georgia, followed by defeat in Switzerland, left Ireland needing a win at home to Denmark to secure a top two spot.

On 4 April 2020, amid the global coronavirus pandemic, McCarthy stood down as manager and was immediately replaced by Stephen Kenny, who had been in charge of the nation's under-21s, for the play-offs.

On 23 October 2021, after suffering a club-record eighth successive loss of the season at the hands of Middlesbrough, McCarthy left the club by mutual consent.

[63] On 19 January 2023, McCarthy was appointed head coach of the Championship's second-bottom placed club Blackpool on a short-term contract until the end of the season.