Huston was born in Rome, Italy. He is the son of actress Zoe Sallis and director John Huston, adoptive brother of Pablo Huston, half-brother of actress Anjelica Huston and screenwriter Tony Huston, uncle of actor Jack Huston, stepbrother of writer and editor Allegra Huston, and grandson of Academy Award-winning actor Walter Huston, through whom he is of Canadian, Irish, and Scottish descent. His mother, Zoe Sallis, was an actress and author whose ancestry was Indian and English. Huston was conceived as a result of an affair between Sallis and John Huston.
His father, John Huston, produced Danny's first feature as a director, Mr. North, an adaptation of Thornton Wilder's last novel, Theophilus North. In 1995's Leaving Las Vegas, he moved in front of the camera and has since acted in over 20 films. He gave his breakthrough acting performance in the independent film Ivans Xtc. The Bernard Rose feature was nominated for several Independent Spirit Awards in 2003, including Best Male Performance for Huston’s portrayal of Hollywood talent agent Ivan Beckman. Huston has worked nonstop as an actor ever since.
Soon after Ivans Xtc, he worked on Martin Scorsese's The Aviator with Leonardo DiCaprio and Alec Baldwin, for which the ensemble cast was nominated for a 2004 SAG Award. In 2006, Huston received the Golden Satellite Award for Best Supporting Actor for his performance as Sandy Woodrow in Fernando Meirelles' The Constant Gardener. That year, Huston starred in the critically acclaimed Australian western The Proposition with Guy Pearce and Emily Watson. The film premiered at the Sundance Film Festival.
Huston also starred in the British independent features Alpha Male and Oliver Parker’s Fade to Black, in which he played Orson Welles alongside Christopher Walken and Paz Vega. He has collaborated several times with British directors Mike Figgis and Bernard Rose, most recently with Rose on The Kreutzer Sonata, which premiered at the 2008 Edinburgh International Film Festival.
His other film credits include Birth, Silver City, Marie Antoinette, The Number 23, The Kingdom, How to Lose Friends & Alienate People and 30 Days of Night. He most recently portrayed Samuel Adams in the award-winning HBO miniseries John Adams. He also portrayed Colonel William Stryker in X-Men Origins: Wolverine, a prequel for the trilogy.
His 2009–10 roles include Boogie Woogie, The Warrior's Way, the thriller Edge of Darkness, and the adventure films Clash of the Titans and Robin Hood. He played the famous lawyer Geoffrey Fieger HBO's film You Don't Know Jack. Huston will also feature alongside Nicolas Cage in the Simon West-directed film Medallion.
Huston played gangster Ben "The Butcher" Diamond on Mitch Glazer's Magic City on the Starz network from 2012 to 2013. He was nominated for the Golden Globe Award for Best Supporting Actor – Series, Miniseries or Television Film in 2013. Later that year, he portrayed The Axeman in a recurring role on American Horror Story: Coven.
Huston has been married twice. His first wife was Academy Award nominee Virginia Madsen. He married his second wife, Katie Jane Evans, in 2001 and they separated in 2006. She committed suicide in October 2008 before the divorce was finalized. They had one daughter named Stella. He dated Magic City co-star Olga Kurylenko for approximately a year.