Carvey was born in Missoula, Montana, the son of Billie, a schoolteacher, and William Carvey, a high school business teacher.[1] Carvey is the brother of Brad Carvey, the engineer/designer of the Video Toaster. The character Garth Algar (from the movie Wayne's World) is a loosely-based portrayal of Brad. Carvey was raised Lutheran.[2] When he was three years old, his family moved to San Carlos, California, in the San Francisco Bay Area. He received his first drum kit at an early age. He attended Tierra Linda Junior High in San Carlos, California, and Carlmont High School in Belmont, California, and received his Bachelor's degree in communications from San Francisco State University.

In 1979, while performing at the Great American Music Hall in San Francisco, he met Paula Zwaggerman, who would later become his wife. Soon after returning to the Bay Area in 1980, Dana and Paula were engaged.

Carvey's first movie role was a small part in the 1981 horror film Halloween II. He then costarred on One of the Boys in 1982, a short-lived television sitcom that also starred Mickey Rooney, Nathan Lane, and Meg Ryan. In 1984, Carvey had a small role in Rob Reiner's This Is Spinal Tap film, in which he played a mime, with fellow comedian Billy Crystal. He also starred in the short-lived movie-based action show Blue Thunder.

In 1986, Carvey became a household name when he joined the cast of NBC's Saturday Night Live. He, along with newcomers Phil Hartman, Kevin Nealon, Jan Hooks and Victoria Jackson, helped to reverse the show's declining popularity and made SNL "must-see" TV once again. His breakout character was The Church Lady, the uptight, smug, and pious host of "Church Chat." Carvey said he based the character on women he knew from his church growing up who would keep track of his and others' attendance. He became so associated with the character that later cast members like Chris Farley referred to Carvey simply as "The Lady."

Carvey's other original characters included Garth Algar (from "Wayne's World"), Hans (from "Hans and Franz"), and The Grumpy Old Man (from Weekend Update appearances). Algar is actually an affectionate caricature of Dana's brother, Brad Carvey, an accomplished electrical engineer who invented the Video Toaster, and has been said by Carvey to have fixed the family clothes dryer using only a butter knife.

During the 1992 US presidential election campaign, he did a dead-on impression of independent candidate Ross Perot; in a prime-time special before the election, Carvey played both Bush and Perot in a three-way debate with Bill Clinton, who was played by Phil Hartman. As Perot, Carvey declined to say the show's signature "Live from New York" opening line because he was actually on tape.

Carvey left SNL in 1993. In 1992, Carvey joined Mike Myers to bring their popular "Wayne's World" sketch to the silver screen with Wayne's World the movie. A sequel was filmed and released in 1993, titled Wayne's World 2. Rumors abound that Mike Myers is writing a screenplay for Wayne's World 3[citation needed] but nothing has been verified yet from either Myers' or Carvey's camp.

Carvey won an Emmy in 1993 for "Outstanding Individual Performance in a Variety or Music Program." He has received a total of six Emmy nominations.