Fonda made his mark early as a Broadway actor. He also appeared in 1938 in plays performed in White Plains, New York, with Joan Tompkins. He made his Hollywood debut in 1935, and his career gained momentum after his Academy Award-nominated performance as Tom Joad in The Grapes of Wrath, a 1940 adaptation of John Steinbeck's novel about an Oklahoma family who moved west during the Dust Bowl. Throughout six decades in Hollywood, Fonda cultivated a strong, appealing screen image in such classics as The Ox-Bow Incident, Mister Roberts and 12 Angry Men. Later, Fonda moved toward both more challenging, darker epics as Sergio Leone's Once Upon a Time in the West (portraying a villain who kills, among others, a child) and lighter roles in family comedies like Yours, Mine and Ours with Lucille Ball.

Fonda was the patriarch of a family of famous actors, including daughter Jane Fonda, son Peter Fonda, granddaughter Bridget Fonda, and grandson Troy Garity; his family and close friends called him "Hank". In 1999, he was named the sixth Greatest Male Star of All Time by the American Film Institute.

Fonda was born in Grand Island, Nebraska to advertising-printing jobber William Brace Fonda and his wife, Elma Herberta (née Jaynes), in the second year of their marriage. The Fonda family had emigrated westward from Genoa, Italy, to the Netherlands in the 1500s, and then to the United States in the 1600s, settling in the town now called Fonda, New York.

Fonda was brought up as a Christian Scientist, though he was baptized an Episcopalian at St. Stephen's Episcopal Church in Grand Island, NE, and claimed that "my whole damn family was nice". They were a close family and highly supportive, especially in health matters, as they avoided doctors due to their religion. Fonda was a bashful, short boy who tended to avoid girls, except his sisters, and was a good skater, swimmer, and runner. He worked part-time in his father's print plant and imagined a possible career as a journalist. Later, he worked after school for the phone company. He also enjoyed drawing. Fonda was active in the Boy Scouts of America and was a Scoutmaster, but was not an Eagle Scout as some report. When he was about fourteen, his father took him to observe a lynching, from the window of his father's plant, of a young black man accused of rape. This so enraged the young Fonda that a keen social awareness of prejudice was present within him for his entire adult life. By his senior year in high school, he grew suddenly to over six feet but remained a shy teenager. He then attended the University of Minnesota, majoring in journalism, but he did not graduate. He took a job with the Retail Credit Company.

At age 20, Fonda started his acting career at the Omaha Community Playhouse when his mother's friend Dodie Brando (mother of Marlon Brando) recommended that he try-out for a juvenile part in You and I, in which he was cast as Ricky. He was both fascinated by the stage, learning everything from set construction to stage production, and also profoundly embarrassed by his acting ability. When he received the lead in Merton of the Movies, he realized the beauty of acting as a profession, as it allowed him to deflect attention from his own tongue-tied personality and create stage characters relying on someone else's scripted words. Fonda decided to quit his job and go East in 1928 to strike his fortune. He arrived on Cape Cod and had just finished a role at the Cape Playhouse in Dennis, Massachusetts when a friend took him over to Falmouth where he instantly became a valued member of the new University Players, an intercollegiate summer stock company, where he worked with Margaret Sullavan, his future wife, and which would be responsible for a lifelong friendship with James Stewart. He landed his first professional role in the University Players production of The Jest, by Sem Benelli, when Joshua Logan, a young sophomore at Princeton who had been double-cast in the show, gave Fonda the part of Tornaquinci, "an elderly Italian with long, white beard and heavy wig." Also in the cast of The Jest with Fonda and Logan were Bretaigne Windust, Kent Smith, and Eleanor Phelps.

The tall (6'1.5") and slim (160 lbs) Fonda headed for New York City, where he was soon joined by Stewart (after Fonda's short marriage to Margaret Sullavan) and the two roommates struggled but honed their skills on Broadway. Fonda appeared in theatrical productions from 1926 to 1934. They fared no better than many Americans in and out of work during the Depression, with sometimes no money even to take the subway. Fonda got the first break going to Hollywood to make his first film appearance in (1935) as the leading man in 20th Century Fox's screen adaptation of The Farmer Takes a Wife, reprising his role from the Broadway production of the same name which gained him critical recognition. Suddenly, Fonda was making $3,000 a week and dining with Hollywood stars like Carole Lombard. Stewart soon followed him to Hollywood, and they roomed together again, in lodgings next door to Greta Garbo. In 1935 Fonda starred in the RKO film I Dream Too Much with the famous opera star Lily Pons. The New York Times proclaimed "Henry Fonda, the most likable of the new crop of romantic juveniles".

Fonda's film career blossomed as he costarred with Sylvia Sidney and Fred MacMurray in The Trail of the Lonesome Pine (1936), the first Technicolor movie filmed outdoors. He also starred with ex-wife Margaret Sullavan in The Moon's Our Home, and a short re-kindling of their relationship led to a brief consideration of re-marriage. Sullavan then married Fonda's agent Leland Hayward and Fonda married socialite Frances Ford Seymour, who had little interest in the movies or the theater. Fonda got the nod for the lead role in You Only Live Once (1937), also costarring Sidney, and directed by Fritz Lang. Fonda's first child Jane Fonda was born on December 21, 1937. A critical success opposite Bette Davis, who had picked Fonda, in the film Jezebel (1938) was followed by the title role in Young Mr. Lincoln (1939), his first collaboration with director John Ford and as Frank James in Jesse James (1939). Another 1939 film was Drums along the Mohawk where he played Gil Martin. directed by John Ford

Fonda's successes led Ford to recruit him to play "Tom Joad" in the film version of John Steinbeck's novel The Grapes of Wrath (1940), but a reluctant Darryl Zanuck, who preferred Tyrone Power, insisted on Fonda's signing a seven-year contract with the studio, Twentieth Century-Fox. Fonda agreed, and was ultimately nominated for an Academy Award for his work in the 1940 film, which many consider to be his finest role, but his friend James Stewart won the Best Actor award for his role in The Philadelphia Story. Second child Peter Fonda was born in 1940. He starred in The Return of Frank James (1940) with Gene Tierney.

Fonda played opposite Barbara Stanwyck in The Lady Eve (1941), and teamed with Gene Tierney in the successful screwball comedy Rings on Her Fingers (1942 ) - Tierney was one of Fondas favorite co-stars, they appeared in three films together. He was acclaimed for his role in The Ox-Bow Incident (1943).

Fonda then enlisted in the Navy to fight in World War II, saying, "I don't want to be in a fake war in a studio." Previously, he and Stewart had helped raise funds for the defense of Britain. Fonda served for three years, initially as a Quartermaster 3rd Class on the destroyer USS Satterlee. He was later commissioned as a Lieutenant Junior Grade in Air Combat Intelligence in the Central Pacific and was awarded a Presidential Citation and the Bronze Star.