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Broderick was born in New York City, the son of Patricia (née Biow), a playwright, actress and painter whose work was posthumously shown at the Tibor de Nagy gallery in New York, and James Broderick, an actor. Broderick's mother was Jewish, and his father a Catholic of Irish descent. Broderick attended grade school at the City & Country School, a progressive K–8 school in Manhattan; and the high school at Walden School, a defunct private school in Manhattan with a strong drama program.

Broderick's first major acting role came in a role in an HB Studio workshop production of playwright Horton Foote's On Valentine's Day, playing opposite his father James, who was a friend of Foote's. This was followed by a lead role in the off-Broadway production of Harvey Fierstein's Torch Song Trilogy; a good review by New York Times theater critic Mel Gussow brought him to the attention of Broadway. Broderick commented on the effects of that review in a 2004 60 Minutes II interview: “ Before I knew it, I was like this guy in a hot play. And suddenly all these doors opened. And it’s only because Mel Gussow happened to come by right before it closed and happened to like it. It’s just amazing. All these things have to line up that are out of your control. ”

He followed that with the role of Eugene Morris Jerome in the Neil Simon Eugene Trilogy including the plays, Brighton Beach Memoirs and Biloxi Blues. His first movie role was also written by Neil Simon. Broderick debuted in Max Dugan Returns (1983). His first big hit film was WarGames, a summer hit in 1983. This was followed by the role of Philippe Gaston in Ladyhawke, in 1985. Broderick auditioned for the role of Alex P. Keaton on the NBC sitcom Family Ties and was offered the role, but he had to turn it down because of his movie schedule. Broderick then got the role as the charming, clever slacker in Ferris Bueller's Day Off. Broderick, who in real life was 23, played a high-school student who, with his girlfriend and best friend, plays hooky and explores Chicago while avoiding the clutches of the dean of students, who is eager to catch Bueller in the act. The movie remains an 80's comedy favorite today and is one of Broderick's best known roles (particularly with teenage audiences) in contrast to the uptight, "nerdy" characters he would play for much of his career. In 1989's Glory, Broderick received good notices for his portrayal of the American Civil War hero Robert Gould Shaw.

Broderick in the 1990s took on his famous role as the adult lion, Simba, in the spectacularly successful animated film, The Lion King. Furthermore, he distinguished himself in two dark comedy roles. The first was that of a bachelor who attracts the friendship of an insane and lonely cable repairman (played by Jim Carrey) in The Cable Guy. The second was that of an Omaha high school teacher determined to stop an overachieving student (played by Reese Witherspoon) from becoming class president in Alexander Payne's Election.

Broderick returned to Broadway as a musical star in the 1990s, most notably his Tony Award winning performance in How to Succeed in Business Without Really Trying and his Tony-Award-nominated performance in the Mel Brooks' stage version of The Producers in 2001. He also continues to make feature films, including the 2005 adaptation of The Producers. Broderick played the role of Leopold “Leo” Bloom, an accountant who co-produces a musical designed to fail, but which turns out to be successful. In “The Producers” Broderick sings several songs, both alone and with other characters. Broderick reunited with his co-star from The Lion King and The Producers, Nathan Lane, in The Odd Couple, which opened on Broadway in October 2005. He has won two Tony Awards, one in 1983 for his featured role in the play Brighton Beach Memoirs, and one in 1995 for his leading role in the musical How to Succeed in Business Without Really Trying. He was also nominated for The Producers, but lost to co-star Nathan Lane.

Broderick met actress Jennifer Grey on the set of Ferris Bueller's Day Off and in 1987 was briefly engaged to the actress. Broderick met actress Sarah Jessica Parker through her brother. The couple married on May 19, 1997 in a civil ceremony in a historic deconsecrated synagogue on the Lower East Side; and while Broderick considers himself Jewish, the ceremony was performed by his sister, Janet Broderick Kraft, an Episcopal priest. Parker and Broderick have one child, James Wilkie Broderick, born on October 28, 2002.They spend a considerable amount of time at their holiday home in County Donegal, Ireland where Broderick spent his summers as a child. He is left-handed, a fact made evident in his first movie, Max Dugan Returns, where he is playing baseball. Broderick is an avid baseball fan. His favorite team is the New York Mets.

On 5 August 1987, while vacationing in Northern Ireland with Jennifer Grey, Broderick caused a fatal collision that killed 63-year-old Margaret Doherty and her 30-year-old daughter, Anna Gallagher. Broderick was driving a rented BMW in Enniskillen, County Fermanagh, when he swerved into oncoming-traffic lane. Anna Gallagher, who was driving the other car, and her mother, were killed instantly. Broderick suffered a broken leg, concussion and collapsed lung. Jennifer Grey escaped with minor injuries. Broderick was initially charged with reckless driving but later plead guilty to a lesser charge of careless driving and was fined the equivalent of US$175. The victim’s family considered the light sentence a miscarriage of justice. In 2003, 16 years after the accident, Margaret Doherty's son Martin came forward and said he was ready to forgive Broderick and wanted to meet him. That same year Broderick‘s spokesman stated, "Matthew is willing to meet up with them".