Hayes was born in Chicago, Illinois, the son of Mary, a director of a non-profit food bank, and Ronald Hayes, a lithographer. He is of Irish descent and was raised Catholic,attending high school in Glen Ellyn, Illinois at Glenbard West High School. Hayes studied piano performance and conducting at Illinois State University but left before graduating. He worked as a classical pianist and served as a music director at the Pheasant Run Theater in St. Charles, Illinois. He also composed original music for a production of Antigone at the Steppenwolf Theatre Company in Chicago. He participated in The Second City improvisational comedy troupe. Hayes moved to Los Angeles in 1995, where he found work as a stand-up comedian, stage actor and as an actor in television commercials, including a 1998 Doritos ad featuring model Ali Landry.

As a teenager, he was an extra in Winona Ryder's first movie, Lucas (1986), which was filmed at his high school, Glenbard West. He made his professional film debut in the independent film Billy's Hollywood Screen Kiss (1998), which brought him wide attention and caught the attention of executives who cast him in the NBC comedy television series Will & Grace, as Jack McFarland, a flamboyantly gay, frequently unemployed actor. The show became a long-running hit and Hayes' performance as Jack earned him seven consecutive Emmy Award nominations (2000–06) as Outstanding Supporting Actor in a Comedy Series. He won the Emmy for his first nomination. Hayes' success led to film appearances in Cats & Dogs (2001), as Jerry Lewis in the made-for-TV movie Martin and Lewis (2002), Pieces of April (2003), The Cat in the Hat (2003) and Win a Date With Tad Hamilton! (2004). He has also guest starred in several television programs, including Scrubs and 30 Rock. In 2005, Hayes was executive producer for Situation: Comedy for Bravo, a reality show like Project Greenlight but for sitcoms. He also executive produced the two winning scripts, chosen by NBC: The Sperm Donor and Stephen's Life. He guest-starred in 2006 in the Adult Swim cameo-filled show Tom Goes to the Mayor. The actor currently is busy with his own production company, Hazy Mills, with Todd Milliner, his producing partner from college. In 2007, Hayes was featured in a major role as Thomas in Rob Reiner's film The Bucket List, starring Jack Nicholson and Morgan Freeman.

Hayes has played both gay and straight characters during his time as an actor but refuses to discuss his sexual orientation in public. He has stated, "When you see me play Jack, I want you to believe that that's a gay character. After Will & Grace is over, when I play a straight character, I want you to believe that, too.