Wheldon was born in Emberton, Buckinghamshire, England. His father Clive competed in karting and his mother acted as timekeeper, giving Wheldon an early introduction to motorsport. He attended Bedford School and excelled in cross-country running, rugby and squash, also captaining the school cricket team. He married Susie Behm in 2008 and the couple had two sons, Sebastian and Oliver.
Wheldon began karting competitively at the age of eight and won the RAC British Cadet Karting Championship three times, in 1988, 1989 and 1990. He won the 1995 FIA Formula A World Cup before transitioning to car racing in the Formula Vauxhall Junior Championship in 1996. He moved to the United States in January 1999 at the suggestion of car manufacturer Ralph Firman Sr., where he won the U.S. F2000 National Championship and was named Rookie of the Year. In 2000, he joined the Toyota Atlantic Championship with PPI Motorsports and became the first driver in series history to win on his debut at Homestead-Miami Speedway, finishing runner-up in the standings. He progressed to Indy Lights in 2001, again finishing runner-up and earning Rookie of the Year honors. During his British junior career he developed a rivalry with Jenson Button, a future Formula One World Champion.
Wheldon joined Panther Racing as a test driver in mid-2002, driving their second car for the final two races of the season. He moved to Andretti Green Racing (AGR) in 2003 after standing in for the injured Dario Franchitti, earning the 2003 IndyCar Rookie of the Year award. In 2004, he took his first series win at Twin Ring Motegi and added two more victories over the year to finish runner-up in the championship behind teammate Tony Kanaan.
In 2005, Wheldon won the IndyCar championship with AGR, claiming a series-record six victories during the season. His Indianapolis 500 victory made him the first British winner of the race since Graham Hill in 1966. After the season he signed with Chip Ganassi Racing. In 2006, his first year with CGR, he tied Sam Hornish Jr. on 475 points but lost the title on tiebreak, having won two races to Hornish's four. He remained with Ganassi through 2008, winning additional races at Kansas Speedway and Iowa Speedway. He also co-won the 2006 24 Hours of Daytona alongside Scott Dixon and Casey Mears.
Wheldon returned to Panther Racing for 2009 and 2010. Though competitive on ovals and collecting podium finishes — including two consecutive second places at Indianapolis in 2009 and 2010 — he did not win a race during those two seasons. He departed Panther after 2010 due to a lack of sponsorship. Without a full-time seat for 2011, he arranged a one-off ride at the Indianapolis 500 with Bryan Herta Autosport in a 2003-vintage Dallara. He won the race in dramatic fashion, taking the lead only on the final lap when championship contender J.R. Hildebrand crashed in the final turn. It was the first time a driver had won the Indianapolis 500 having led only the last lap. Following the race, Wheldon served as a television commentator for Versus and tested the new DW12 Dallara chassis for its 2012 introduction. On the morning of 16 October 2011, he signed a multi-year contract to replace Danica Patrick at Andretti Autosport for 2012.
Wheldon entered the season finale at Las Vegas Motor Speedway as part of a $5 million IndyCar challenge — he would share the prize with a randomly selected fan if he won from last on the grid. On lap 11 of the planned 200-lap race, a fifteen-car accident erupted between turns one and two. Wheldon, running in 24th at approximately 224 mph, was launched airborne after striking the left rear wheel of Charlie Kimball's car. His car traveled approximately 325 feet semi-airborne before colliding with a catchfence post. The post penetrated the cockpit and struck the right-hand side of his helmet. He was airlifted to University Medical Center of Southern Nevada and pronounced dead on arrival. An autopsy determined the cause of death as blunt trauma to the head. The race was abandoned; a five-lap formation salute was held in his honor.
Two days after his death, Dallara named their new chassis the DW12 in Wheldon's honor. The car incorporated design elements intended to reduce the risk of accidents similar to the one that killed him. Wheldon was posthumously awarded the Gregor Grant Award and was inducted into the Indianapolis Motor Speedway Hall of Fame in May 2019. The street at St. Petersburg, Florida, near turn ten of the IndyCar street course was named Dan Wheldon Way. A documentary, The Lionheart, about his life and death was released in 2023. His sons Sebastian and Oliver have both competed in karting, supported by Andretti Autosport since 2021.