Various sources provide contradictory information about Stroheim's early life, probably because Stroheim himself was fond of embellishing his past. He was not, as reported in several accounts, descended from Viennese nobility, nor had he been an officer in the Austrian army. Rather, he was the son of a Jewish hatmaker, and he served in the army—though he was never an officer—before coming to the United States in 1909. He worked as an actor and as assistant to the leading director D.W. Griffith (Griffith, D W) in such famous early films as The Birth of a Nation (1915) and Intolerance (1916). Stroheim wrote the script and played the leading role in Blind Husbands (1919), his first independently directed picture. As an early exemplar of the changing postwar morality, it intimated that a woman had the right to seek love outside of an unsatisfying marriage. Stroheim's growing obsession with painstaking detail was reflected in The Devil's Passkey (1920; now lost) and Foolish Wives (1922), pictures that enhanced his reputation as a director.

Stroheim's masterpiece was Greed (1924), an adaptation of Frank Norris (Norris, Frank)'s novel McTeague (1899), which dealt with the power of money to corrupt. A landmark in film realism, its grim irony and brutal honesty were untempered by optimism or compassion. Stroheim engaged in many legendary battles with studio executives over the years, but none so bitter as when Greed was cut from its original 9-hour length to 140 minutes without Stroheim's approval or participation. Despite the cuts, the film retained much of its power, because Stroheim had concentrated the meaning of each scene in carefully constructed detail rather than by the juxtaposition of scenes. It remains a film classic and strongly influenced such later directors as King Vidor (Vidor, King) and Josef von Sternberg (Sternberg, Josef von).