Bannen was born in Airdrie, Lanarkshire, the son of Clare (née Galloway) and John James Bannen, a Lawyer. Bannen served in the British Army after attending St Aloysius' College, Glasgow and Ratcliffe College, Leicestershire. His first acting role came in a 1947 Dublin stage production of Armlet of Jade. He became a successful figure on the London stage, making a name for himself in the plays of both Shakespeare and Eugene O'Neill. He was an original member of the Royal Shakespeare Company and appeared on Broadway as well.
His film debut occurred in the early 1950s with a small role in Pool of London (1951), and he quickly rose to prominence, primarily in a wide range of supporting roles. He had a very significant role as Stoker Samuel Bannister in Yangtse Incident. During the early stages of his career he worked with the Boulting Brothers on Private's Progress and Carlton-Browne of the F.O.. His performance as Crow in The FLIGHT of the Phoenix (1965) earned him an Academy Award nomination for Best Supporting Actor, making him the first Scottish actor to receive this honour; he also received a Golden Globe nomination for New Star of the Year - Actor. That same year, he starred alongside Sean Connery in the WW2 prison drama, The Hill.
Ian Bannen received an Academy Award nomination in 1965 for Best Supporting Actor, for his performance in The FLIGHT of the Phoenix as Ratbags Crow, one of the survivors of a plane crash. He also received a BAFTA Award nomination for Best Supporting Actor for his performance as suspected child molester Kenneth Baxter in The Offence (1972). He also won acclaim for his roles as Brother Benedict in Lamb (1986), Grandfather George in John Boorman's Hope and Glory (1987) (for which he received a second Best Supporting Actor BAFTA nomination), the elder Robert de Brus in Braveheart (1995) and as the touchingly crafty villager in Waking Ned (1998).
Director John Schlesinger cast him as a replacement for Alan Bates in the part of well-off homosexual Doctor Daniel Hirsh in his controversial film Sunday Bloody Sunday (1971), after Bates was deemed unavailable to shoot. According to Screenwriter Penelope Gilliatt, Bannen never felt comfortable with the part. The anxiety adversely affected his performance during the early filming. Schlesinger replaced Bannen with Peter Finch, who received an Oscar nomination for the role.
Bannen was known for starring as Christopher Lowe in From Beyond the Grave (1974), Jim Prideaux in the BBC production of Tinker Tailor Soldier Spy (1979) and Jackie O'Shea in Waking Ned (1998). He was nominated for the Academy Award for Best Supporting Actor for The FLIGHT of the Phoenix (1965), as well as the BAFTA Award for Best Actor in a Supporting Role for both The Offence (1972) and Hope and Glory (1987).
In 1996, he was honoured with the BAFTA Lifetime Achievement Award.
Bannen was killed, aged 71, in a car accident by Loch Ness in November 1999. He and his wife, Marilyn Salisbury, who had been driving, were discovered in an overturned vehicle at Knockies Straight between Inverness and Fort Augustus. His wife, a Veterinarian for the Ministry of Agriculture, suffered only minor injuries. The couple had been married since 1976; they had no children.
Bannen was posthumously given the 2000 Glenfiddich Spirit of Scotland Award.
