Lunt attended Carroll College (Waukesha, Wis.) and Harvard College but left school for an acting career, making his debut in a Boston repertory company in 1912 and thereafter taking several dramatic and vaudeville roles; these culminated in a critical success in the title role of Booth Tarkington's Clarence (1919) on Broadway. Meanwhile, Fontanne had studied under Ellen Terry (Terry, Ellen) in England, made her road-show debut in 1905, and won her first London role in 1909 in the Drury Lane Pantomime and her first New York City role in 1910. In 1916 she returned to New York at the invitation of Laurette Taylor (Taylor, Laurette), with whom she appeared in The Harp of Life, Out There, and others. While playing in The Wooing of Eve in 1917, Fontanne met Lunt; they appeared together in A Young Man's Fancy in summer stock in 1919. In 1920 she appeared in Chris, an early version of Eugene O'Neill's Anna Christie, and in 1921, while Lunt was on a road tour with Clarence, Fontanne was a great success in the George S. Kaufman–Marc Connelly comedy Dulcy.

In 1922 Fontanne and Lunt were married, and thereafter they appeared on the stage almost invariably together. In 1924 they joined the Theatre Guild and with The Guardsman of that year were celebrated enthusiastically as the bright couple of the Broadway stage. Their superlative performances, especially in comedies focusing on marital infidelity, brought many triumphs for the Theatre Guild, under whose auspices they appeared until 1929. The couple constantly strove for perfection and rehearsed almost continuously to attain the effortless rapport that was their hallmark. Although they were considered at their best in comedies by George Bernard Shaw (Shaw, George Bernard), Noël Coward, and Terence Rattigan (Rattigan, Sir Terence), Fontanne and Lunt appeared in several dramas as well. Among their plays were Arms and the Man (1925), The Goat Song (1926), The Doctor's Dilemma (1927), Elizabeth the Queen (1930), Idiot's Delight (1936), Amphitryon 38 (1938), and The Pirate (1942). They appeared separately in two O'Neill plays, he in Marco Millions (1928) and she in Strange Interlude (1928). They also appeared together in films and on television. Over the years from the 1930s, Lunt himself directed a number of plays, as well as two operas for the Metropolitan Opera Company.

Despite their devotion to each other, their marriage was widely rumoured to be a lavender marriage, or a marriage of convenience. Nevertheless, the Lunts were almost inseparable during their 55-year marriage. They retired from the stage in 1958, and that year the old Globe Theatre in New York City was renamed the Lunt-Fontanne Theater in their honour. They came out of retirement in 1965 to act in Magnificent Yankee for the Hallmark Hall of Fame television series, winning Emmy Awards for their performances. Two years later Fontanne appeared alone in a television production of Anastasia; it was her first performance without Lunt since 1928. In retirement they lived in Ten Chimneys, an estate they owned in Genesee Depot, Wis., since their marriage; it is now a national historic landmark.