He made his Broadway debut in 1936 as the Radio Announcer in Doty Hobart and Tom McKnight's Double Dummy at the John Golden Theatre. In 1946 he won both a Theatre World Award and a Clarence Derwent Award for his portrayal of Harry Brock in Garson Kanin's Born Yesterday.
Douglas began appearing in films in 1949. He may be best remembered for two baseball comedy movies, Angels in the Outfield (1951) and It Happens Every Spring (1949). He also played Richard Widmark's police partner in the 1950 thriller Panic in the Streets, frustrated newlywed Porter Hollingsway in A Letter to Three Wives (1949), Sgt. Kowalski in The Big Lift (1950), businessman Josiah Walter Dudley in Executive Suite (1954) and a con man turned monk in When in Rome (1952). Douglas was host of the 22nd annual Academy Awards in March 1950. Continuing in radio, he was the announcer for The Ed Wynn Show, and the first host of NBC Radio's The Horn & Hardart Children's Hour. In April 1959 Douglas appeared in The Lucille Ball-Desi Arnaz Show as Lucy Ricardo's television morning show co-host in the episode "Lucy Wants a Career".
Douglas was originally cast in the 1960 episode of The Twilight Zone called "The Mighty Casey", a role written for him by Rod Serling based on his character in Angels in the Outfield, but Douglas died the day after production of the episode had been completed. His role was taken over by Jack Warden, and most of the episode was refilmed several months later.
In January 1942, Douglas married actress Virginia Field; Field was 7 months pregnant. After moving in February 1942, Johnnie Douglas was born on March 2, 1942. Douglas found out that Field was having an affair with Dick Powell, and they separated in December 1945. They divorced on January 30, 1946, and Douglas returned to California to resume his acting career. After 3½ years of being single, he met Jan Sterling at MGM Studios and soon they were engaged. They married on June 22, 1950, in Palm Springs, California and soon moved to Burlington, Vermont, where their daughter, Celia Douglas, was born on August 30, 1954.
Paul Douglas died of a heart attack in Hollywood, California on September 11, 1959, at the age of 52. Film director Billy Wilder and his longtime co-writer I. A. L. ('Izzy') Diamond had just offered him the role of Jeff Sheldrake in the 1960 movie The Apartment that went to Fred MacMurray instead. Wilder later said: "I saw him and his wife, Jan Sterling, at a restaurant, and I realized he was perfect, and I asked him right there in the parking lot. About two days before we were to start, he had a heart attack and died. Iz and I were shattered."