Khan was originally expected to make his debut in India's Hindi film industry, commonly known as 'Bollywood', soon after the release of Khuda Kay Liye but the unstable political situation between India and Pakistan after the 2008 Mumbai terror attacks delayed it. He made his Bollywood debut in Shashanka Ghosh's 2014 comedy-drama, Khoobsurat, with Sonam Kapoor. Khan played Vikram Singh Rathore, Kapoor's love interest and the son of her patient. On Zee News, Ritika Handoo praised his "immensely polished acting skills" and said that he fit his character very well. Deepanjana Pal of Firstpost liked Gosh's decision to make Khan's character a sex object, feeling that he blazed a trail for other male actors in similar roles. The film was particularly well received in the UK, the UAE, and Pakistan because of Khan's following in those countries from his television work. He received a Filmfare Award for Best Male Debut for his role in the film.

Khan made a cameo appearance in Asim Raza's coming-of-age film, Ho Mann Jahaan, in January 2016. He then had a main role in Shakun Batra's family drama, Kapoor & Sons. The film, which featured Khan as part of an ensemble cast including Rishi Kapoor, Ratna Pathak Shah, Rajat Kapoor, Sidharth Malhotra, and Alia Bhatt, was a commercial success. The actor received near-unanimous critical praise for his portrayal of Rahul Kapoor, a closeted homosexual writer. A Bollywood Hungama reviewer enjoyed Khan's performance, saying that his character creates an emotional connection with the audience and NDTV film critic Saibal Chaterjee praised his self-assured performance. Kapoor & Sons earned Khan the Diversity Award at the Indian Film Festival of Melbourne and a nomination for Best Supporting Actor at the 62nd Filmfare Awards. According to the film's producer, Karan Johar, "We went to six actors and after six rejections, I told Shakun Batra (director) that we should drop the idea and he started developing another screenplay. Later, in a flash of thought Fawad came to my mind. I sent him the script, he loved it and said he would do it." In September 2016, Johar said that Khan's wife pressured him to accept the role. Later in 2016, Khan appeared in a small role with Ranbir Kapoor, Anushka Sharma, and Aishwarya Rai Bachchan in Karan Johar's romantic drama, Ae Dil Hai Mushkil. Raja Sen of Rediff.com found his role "far too little to justify the ridiculous kerfuffle his casting had caused", but called him the perfect choice for the part. In Deccan Chronicle Subhash K. Jha described Khan's role as "meagre and sketchy".

In 2022, Khan made his acting comeback with his Marvel Cinematic Universe debut in Ms. Marvel as Hassan, Kamala Khan / Ms. Marvel's great-grandfather.

Later in 2022, Khan appeared in Bilal Lashari's Punjabi action-drama film, The Legend of Maula Jatt, alongside Mahira Khan and Hamza Ali Abbassi in which Fawad played the title role originated by Sultan Rahi. For the role, he gained considerable weight. It became the highest-grossing Pakistani film of all time as well as the highest-grossing Punjabi-language film of all time.

In 2023, he appeared in Faisal Qureshi's comedy film Money Back Guarantee which got mixed reviews.

He is expected to appear as pop singer Alamgir in Sultan Ghani's Albela Rahi. He will also be seen with Mahira Khan in a film called Neelofer. Fawad Khan will also be seen in the lead role of renowned director and producer Haseeb Hasan's upcoming film "Aan". Khan will also be seen in Pakistan's first Netflix Original Series, Jo Bachay Hain Sang Samait Lo which is an official adaptation of Farhat Ishtiaq’s 2013 Urdu-language novel of the same name. He will star alongside Mahira Khan, Sanam Saeed, and Ahad Raza Mir.

Two rock bands, Ahmed Ali Butt's Entity and Khan's Paradigm, were active in Lahore between 1994 and 2000. The bands collaborated on the title track of a television sitcom, Jutt and Bond (featuring Khan and Ahmed Ali Butt), in the early 2000s. This collaboration led to the bands' merger into Entity Paradigm. The new band appeared in the 2002 finale of Pepsi Battle of the Bands, losing to the band Aaroh. Entity Paradigm's debut album, Irtiqa, was released in October 2003; it received broad critical appreciation, particularly the popular romantic track "Rahguzar". The band broke up in 2007, reuniting in 2010 to participate in the third season of Coke Studio (where they covered Sajjad Ali's "Bolo Bolo"). Their single, "Shor Macha", was released that year. Dawn listed it among the year's most popular Pakistani songs in the newspaper's online poll. Khan was featured in its video (directed by Bilal Lashari) and said that he had played almost 250 shows as a musician.He left the band in 2012 to focus on his acting career

Khan attended Islamic Relief USA fundraisers in San Jose and Washington, D.C., and raised money for the Shukat Khanum Memorial Cancer Hospital and Research Centre in Bahrain. He has supported SOS Children's Villages by participating in children's carnivals in 2014 and 2017. In March 2015, Khan toured the United States and Canada and raised money for Pakistani charities; he has also raised money in London for charitable organisations in Pakistan. He and his wife participated in a musical tour of the United States to raise money for charitable organisations throughout Pakistan. In November 2015, they officiated at the launch of a tree-planting event organised by the Shaukat Khanum Memorial Cancer Hospital and Research Centre in Peshawar. Khan appeared in Ali Zafar's music video, "Urainge", which was made as a tribute to the victims of the 2014 Peshawar school attack.

Khan married Sadaf Khan in 2005 after a seven-year courtship. They have three children. Khan and his wife founded Silk by Fawad Khan, a clothing line, whose debut collection was launched in August 2012 in Lahore.

He was diagnosed with Type 1 diabetes at age 17, after an accident which damaged his pancreas. The accident occurred behind a swimming pool, where Khan was scratched and jumped into untreated water. He later realized he had the disease when he lost 10 kilograms (22 lb).

Khan performed Hajj, the annual pilgrimage of Muslims to Makkah, along with his family in 2018 and was therein invited to the Annual Hajj Lunch by King Salman and Crown Prince Mohammed bin Salman of Saudi Arabia.