Gallagher was born in Manhattan, New York City. His mother, Mary Ann (née O'Shea) (August 23, 1915 - June 6, 2004), was a bacteriologist, and his father, Thomas Francis Gallagher, Jr. (June 10, 1912 - November 16, 1999), was an advertising executive. Gallagher is the youngest of their three children. He is of Irish Catholic background and was raised in Armonk, New York. Gallagher graduated from Tufts University, where he was active in theater, appearing in such shows as Stephen Sondheim's Company and singing with the all-male a cappella group the Beelzebubs.
Gallagher appeared on Broadway with Glenn Close in Tom Stoppard's The Real Thing and made his feature film debut in the Taylor Hackford film The Idolmaker, but first achieved fame for his role in Steven Soderbergh's Sex, Lies, and Videotape (1989). He also starred as Sky Masterson in the 1992 Broadway hit revival of Guys and Dolls.
Gallagher played a potential career threat to Tim Robbins's studio executive in The Player (1992); the comatose fiancé of Sandra Bullock in While You Were Sleeping (1995); a real estate salesman having an affair with Annette Bening in American Beauty (1999); a media executive in Mr. Deeds (2002); and a political reporter exposing media ethics during a presidential debate in The Last Debate.
From 2003 to 2007, Gallagher starred as Sandy Cohen, a Jewish public defender and corporate Lawyer, on the Fox television show The O.C.. He hosts an annual award ceremony named "The Sandy Cohen Awards" or The Sandys, which, in honor of his character on The O.C., gives a scholarship to a law school student at UC Berkeley who wants to become a public defender.
In 2005, Gallagher received the P.T. Barnum Award from Tufts University for his exceptional work in the field of media and entertainment. In 2007, Gallagher received the "Light on the Hill" award at Tufts University. The award is given to notable alumni from Tufts who have demonstrated ambition, achievement, and active citizenship.
Gallagher is married to Paula Harwood and has two children, James and Kathryn. His daughter Kathryn is an Actress and singer, and in 2015 performed in Deaf West's production of Spring Awakening on Broadway as the voice of Martha.
