Huston was born in Rome, Italy. He is the son of director John Huston, half-brother of actress Anjelica Huston and screenwriter Tony Huston, uncle of actor Jack Huston, stepbrother of writer and editor Allegra Huston, and grandson of Academy Award-winning actor Walter Huston. His mother, Zoe Sallis, was an actress and author whose ancestry was Indian and English. Huston was conceived as a result of an affair between Sallis and John Huston.
His father, John Huston, produced Danny's first feature as a director, Mr. North, an adaptation of Thornton Wilder's last novel, Theophilus North. In 1995's Leaving Las Vegas, he moved in front of the camera and has since acted in over 20 films. He gave his breakthrough acting performance in the independent film Ivans Xtc. The Bernard Rose feature was nominated for several Independent Spirit Awards in 2003, including Best Male Performance for Huston’s portrayal of Hollywood talent agent Ivan Beckman. Huston has worked nonstop as an actor ever since.
Soon after Ivans Xtc, he worked on Martin Scorsese's The Aviator alongside Leonardo DiCaprio and Alec Baldwin, for which the ensemble cast was nominated for a 2004 SAG Award. In 2006, Huston received the Golden Satellite Award for Best Supporting Actor for his performance as Sandy Woodrow in Fernando Meirelles' The Constant Gardener. That same year, Huston starred in the critically acclaimed Australian western The Proposition alongside Guy Pearce and Emily Watson. The film premiered at the Sundance Film Festival.
Huston also starred in the British independent features Alpha Male and Oliver Parker’s Fade to Black, in which he played Orson Welles alongside Christopher Walken and Paz Vega. He has collaborated several times with British directors Mike Figgis and Bernard Rose, most recently with Rose on The Kreutzer Sonata, which premiered at the 2008 Edinburgh International Film Festival.