After graduating with a theatre degree (1986) from Northwestern University in Evanston, Ill., Colbert joined the Second City comedy improv troupe in Chicago. There he met Amy Sedaris and Paul Dinello, with whom he created the award-winning sketch show Exit 57 (1995–96) and the bizarre sitcom Strangers with Candy (1999–2000), both on the Comedy Central cable network. Colbert worked on several other television projects before joining Comedy Central's The Daily Show in 1997. For eight years he was a correspondent and writer on the news parody, where he became a fan favourite for such segments as “This Week in God,” a look at religious issues in the news, and “Even Stephven,” a mock debate between Colbert and fellow correspondent Steve Carell.

In 2005 Colbert became the host of his own spin-off show, The Colbert Report, and took on the guise of a self-important conservative commentator, a persona meant to parody certain cable-news personalities, most notably Bill O'Reilly. During his first show Colbert coined the word truthiness to express a kind of unchanging “truth” derived from a gut feeling rather than from any known facts. (Truthiness was named the Word of the Year in 2005 by the American Dialect Society.) The neologism became the organizing principle for the show, where Colbert's rants about political and cultural issues and his expressions of personal idiosyncrasies (such as an unyielding hatred of bears) were treated with the same amount of seriousness. In 2008 The Colbert Report earned both a Peabody Award and an Emmy Award for outstanding writing.

In April 2006 Colbert blurred the line between entertainment and political critique in a very public forum when he was the featured speaker at the White House Correspondents' Association dinner—an annual event that traditionally featured good-natured ribbing between the president and the press. He performed in character, lampooning George W. Bush (Bush, George W.)'s administration and the mainstream media with a degree of harshness (or candor, depending on one's political leanings) not common to the event. The resulting publicity raised Colbert's national profile and helped turn him into something of a political tastemaker for many young liberals.

In addition to his acting credits, Colbert provided vocal talent for many cartoons, including “TV Funhouse” on Saturday Night Live. He coauthored Wigfield (2003) with Sedaris and Dinello and starred with them in a feature film adaptation of Strangers with Candy (2005). In 2007 Colbert published I Am America (And So Can You!), in which he used his television-pundit persona to comment on—and frequently deride—various aspects of American society, including religion, the media, higher education, and dating.