Kapoor began acting on the stage; he worked with Motley, a theater group run by Naseeruddin Shah. Kapoor made his debut in Bollywood as an assistant director for Rakesh Mehra's Aks. Later he moved into acting, starring opposite Tabu in Meenaxi: A Tale of Three Cities.
In 2006, Kunal Kapoor came to prominence with the hit film, Rang De Basanti. The film was critically and commercially successful, and it lost to Amol Palekar's Paheli as India's official entry to the Oscars and was the official entry at the BAFTA.His performance was acclaimed and he received a Filmfare Best Supporting Actor Award nomination.
In 2007, he starred in the movie Hattrick. However, the movie failed to do well at the box office. His next two films, Laaga Chunari Mein Daag and Aaja Nachle, also failed to do well at the box office. Kunal Kapoor also appeared in Welcome to Sajjanpur, which released on 19th of September 2008. There has been some speculation regarding Kapoor's popularity as an actor in the years since Rang de Basanti.
Kapoor also voiced the Indian god Rama in Mahayoddha Rama, directed by Raizada Rohit Jaising Vaid. The film is an animated mythological movie based on the Ramayana.Kapoor will also appear in Parzania director Rahul Dholakia's next film which is tentatively called Lamhaa and also stars Sanjay Dutt.
He will also appear in Anurag Kashyap’s next film, where he will play Raj Comics' superhero Doga. Kapoor is scheduled to begin shooting a romantic comedy film in early 2009. The film is based on a script that he completed in June 2008.