Dileep started his career in a troupe called Kalabhavan, working as a Mimicry artist. Later he got a chance to be the assistant director to director Kamal. While being an assistant director, Dileep did some small roles, debuting with just a small scene in Ennodu Ishtam Koodaamo (1992). The film Manathe Kottaram(1994) gave him the first break as the hero. The film Sallapam (1996) was a turning point in his career, where he graduated to serious roles.

His comic timing and dialogue delivery in films like Thenkasipattanam",Kalyana Sougandhikam(1996), Punjabi House(1998) and Ee Parakkum Thalika(2001) made him very popular among the Malayali audience. He rose to stardom with later films like Joker and Meesha Madhavan. His following films such as Kunjikoonan, Kalyanaraman, CID Moosa were super hits of Malayalam film industry. He is known by critics to have brought about the rise of "Slapstick comedy" in Malayalam cinema which till then was known to be "realistic" and effective.

Dileep ventured out of his comedy track sometimes and got critically acclaimed. His role in the offbeat film Kadhavaseshan(2004) was well appreciated. He fared as an action hero in Runway(2005), Lion(2006), Chess(2006), DON(2006). In them Runway and Lion were super hits. Chess got average collection but DON flopped at the Box Office.

His first film with the acclaimed director Sathyan Anthikkad, titiled Vinodayathra, was released in April 2007. It is one of the biggest Malayalam movie hits of 2007 so far.