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Dileep started his film career as an assistant director to Kamal in 1992. He became popular for his impressionist stage shows and the Comicola television comedy series on Asianet. His role as Dilip in Manathe Kottaram (1994) paved way to his acting career. Films such as Sallapam (1996), Ee Puzhayum Kadannu (1997), Punjabi House (1998), and Udayapuram Sulthan (1999) established Dileep's status as a prominent actor during the late-1990s.
Meesa Madhavan (2002) and Chanthupottu (2005) were two of the most significant films in Dileep's career. He won the Filmfare Award for Best Actor for his role as Madhavan in the former. He won his first Kerala State Film Award (Special Jury) for his performance in Kunjikoonan (2002).
He ventured into production, and produced and starred in C.I.D. Moosa (2003) under the banner Graand Production. Kathavasheshan (2004) won Dileep the Kerala State Film Award for Second Best Film as a producer. In 2008, under the banner of Graand Production, Dileep produced Twenty:20 by casting most of the mainstream actors of Malayalam cinema, which had become the highest grossing Malayalam film at that time. He produced the multi-starrer in order to raise funds for the Association of Malayalam Movie Artists (AMMA).