He is best-known as the lead guitarist and vocalist for the band Dire Straits, but has also made albums as a solo performer and played in other groups (such as The Notting Hillbillies). Additionally, he has performed on the work of other artists, including Bob Dylan, Eric Clapton, Steely Dan and the late Chet Atkins (in Neck & Neck). He has produced albums for artists such as Tina Turner, Randy Newman, Bob Dylan and Emmylou Harris. In addition, he has scored the music to several films, including Local Hero, The Princess Bride, Cal, Last Exit to Brooklyn and Wag the Dog.

He is widely regarded as one of the best fingerstyle guitarists of the modern era. Knopfler was ranked #27 on Rolling Stone magazine's list of "100 Greatest Guitarists of All Time".