He attended Nazareth Regional High School in Brooklyn, then graduated from the University of South Carolina, where he played under coach Frank McGuire.

Drafted in the sixth round of the 1976 NBA draft with the 99th overall pick by the Philadelphia 76ers, the 6'3" guard played for them for one full season along with Hall-of-Fame teammate Julius Erving and made the Finals in a losing effort against the Portland Trail Blazers.

Houston made the finals, and this time Dunleavy played a large role for his team in the series, including scoring a game-high 28 points to help lead the Rockets to a Game 4 win, but yet again his team lost, this time to the Boston Celtics.

His best season as a player was with Houston in 1980–81, when he averaged 10.5 points per game and started on a team that played in the NBA Finals.

[4] In 1991 his team, led by Magic Johnson and Vlade Divac, beat the Portland Trail Blazers in the Western Conference Finals and he led his team to the NBA Finals against the Chicago Bulls but they lost in five games.

[7][8] The Clippers accused Dunleavy of defrauding the team, and he sued the club for money owed on the remainder of his contract.

[9] On March 28, 2016, Tulane University announced Dunleavy as the coach of the men's basketball team.