Gruffudd started his acting career at the age of 13 in a Welsh television film called Austin (1986) and then later moved on to the Welsh soap opera Pobol y Cwm (People of the Valley) from 1987 to 1994. In 1992, at 18, he began attending the Royal Academy of Dramatic Art (RADA) in London. However, he was only given small parts in the Academy's productions, and feeling isolated and directionless, almost dropped out several times. However, in 1995 in his final year, he was cast in Ibsen's Hedda Gabler as George (Jörgen) Tesman, the husband of Hedda, the lead character. This performance led to him being offered the lead role in the 1996 TV remake of Poldark.

After playing Oscar Wilde's lover John Gray in 1997's Wilde he took his first international role as Fifth Officer Harold Lowe in the blockbuster film Titanic. He later landed his best-known role as Horatio Hornblower in Hornblower, the Meridian production of the C.S. Forester novels (1998–2003), shown on ITV1 and A&E.