Waterman was born the youngest of nine children to Rose Juliana (née Saunders) and Harry Frank Waterman in Clapham,[3][4][5] London. The family, which included siblings Ken, Peter, Stella, Norma, and Myrna, lived at 2 Elms Road, Clapham Common South Side.[3] Harry Waterman was a ticket collector for British Railways.[5] Two older sisters, Joy and Vera, had already left home by the time Dennis was born, and another brother, Allen, had died as a young child.[3]
Boxing was a big part of Waterman's childhood. His father had been an amateur boxer and made all of his sons box.[6] His older brother Ken first took Dennis boxing when he was three years old,[7] and when he was ten Dennis joined Caius Boxing Club.[6] Another older brother, Peter, was a welterweight boxing champion.[5]
Waterman was educated at the Granard Primary School, a state primary school on the Ashburton Estate in Putney, South-West London, followed by Corona Stage School, an independent school at Ravenscourt Park in Hammersmith in West London.[5]
Waterman's acting career began in childhood. His first role was in Night Train for Inverness (1960).[5] He appeared in two small stage roles for the Royal Shakespeare Company's 1960 season.[8] In 1961, at the age of 13, he played the part of Winthrop Paroo in the Adelphi Theatre production of The Music Man. A year later, he starred as William Brown in the BBC TV series William based on the Just William books of Richmal Crompton. Waterman played the role of Oliver Twist in the production of the Lionel Bart musical Oliver! staged at the Mermaid Theatre, London, in the early 1960s, and appears on the cast recording released in 1961. Waterman was a series regular in the 1962 CBS comedy Fair Exchange, playing teenager Neville Finch. In 1963, he took a "starring" role in the Children's Film Foundation film Go Kart Go.[9]
Waterman was in the original cast of Saved, the play written by Edward Bond, and first produced at the Royal Court Theatre in November 1965. He had a major role in the feature film version of Up The Junction (1968) in which he played Peter, boyfriend to Polly (Suzy Kendall).
In the early 1970s, Waterman appeared in the BBC television series Colditz as a young Gestapo officer. He played the brother of a victim of Count Dracula (Christopher Lee) in the Hammer film Scars of Dracula (1970), and the boyfriend of Susan George in Fright (1971). He appeared alongside Richard Harris and John Huston in a Hollywood western, Man in the Wilderness (1971). He was a member of the company of actors who featured in The Sextet (1972), a BBC 2 series which included the Dennis Potter drama Follow the Yellow Brick Road, and Waterman later appeared in the same dramatist's Joe's Ark (Play for Today, 1974). Both plays were directed by Alan Bridges. Also in 1974, Waterman appeared in episode 4 of the second series of the comedy programme Man About the House entitled "Did You Ever Meet Rommel", in which he played a friend of Robin, a German student by the name of Franz Wasserman (an evident play on his own surname).
He became a household name as DS George Carter in The Sweeney during the 1970s. As well as starring as Terry McCann in Minder, Waterman sang the theme song, "I Could Be So Good for You", which was a top three UK hit in 1980 and a top ten hit in Australia.[10][11] It was written by his then-wife Patricia along with Gerard Kenny. Waterman also recorded a song with George Cole: "What Are We Gonna Get For 'Er Indoors?"
In 1976, Waterman released his first album, Downwind of Angels, arranged and produced by Brian Bennett. A single, "I Will Glide", was released from the album, but did not enter the top 40. The backing singers on "I Will Glide" were the choir of Belmont School, where Brian Bennett's son, Warren, was a pupil.
In 1978, Waterman returned to the RSC to play Sackett in Bronson Howard's comedy Saratoga.[12]
Waterman starred in a television film made by Tyne Tees Television entitled The World Cup: A Captain's Tale (1982). It was the true story of West Auckland Town F.C., a part-time side who won the Sir Thomas Lipton Trophy, sometimes described as the 'First World Cup', in 1909 and 1911. Waterman played the part of Bob Jones, the club captain. It cost £1.5 million to make of which most was funded by Waterman. Shooting took place in the North East and in Turin in Italy. Scenes were shot in County Durham pit villages and in Ashington, Northumberland where goal posts and a grandstand were erected in a public park with a colliery headframe in the background.[13]
In 1982, Waterman starred in the musical Windy City. A relatively short-lived production, the cast included Anton Rodgers, Diane Langton, Victor Spinetti and Amanda Redman, with whom Waterman had an eighteen-month affair during the run of the musical and with whom he later went on to star in the TV series New Tricks. Windy City closed on 26 February 1983 after 250 performances. Waterman took the lead male role in the BAFTA Award-winning BBC adaptation of Fay Weldon's The Life and Loves of a She-Devil (1986).
In 1983, Waterman narrated an eight-part BBC documentary series about Asian martial arts titled The Way of the Warrior.
In an Australian television film, The First Kangaroos (1988), Waterman's depiction of the rugby player Albert Goldthorpe drew formal complaints from Goldthorpe's granddaughter.[14]
In 1988, Waterman voiced Vernon's dim-witted, stupid and food-loving sidekick Toaster in the children's animated series Tube Mice, which also starred George Cole.
After leaving Minder, Waterman appeared as Thomas Gynn in the comedy drama Stay Lucky (1989–93), with Jan Francis and Emma Wray; self made millionaire Tony Carpenter in the sitcom On the Up (1990-2) and John Neil in the mini series Circles of Deceit (1995–96). Between 1997 to 1999, he appeared as John Danson (the head of the largest UK smuggling network) in series 3 and 4 of the crime drama The Knock.
He was a regular cast member in every season of New Tricks, from 2003 to 2014. After expressing his intent to leave the series during its final season (2015), he appeared in only the first two episodes. He recited excerpts from the journal of Walter H. Thompson for the UK history series Churchill's Bodyguard. He appeared on stage in Jeffrey Bernard is Unwell by Keith Waterhouse[15] and as Alfred P. Doolittle in the 2001 London revival of My Fair Lady. He narrated the reality-format television programme Bad Lads' Army and appeared in the 2009 BBC2 miniseries Moses Jones.[16]
In 2020, Waterman starred in the Australian drama-comedy film Never Too Late which had been filmed in Adelaide, South Australia the previous year.[17]
Waterman filming New Tricks in 2012