Magnussen began in karts before winning the Danish Formula Ford Championship in 2008 with eleven victories from fifteen races. Between that title and securing sponsorship for Formula Renault in 2009, he worked as a factory welder due to lack of funds. He was runner-up to António Félix da Costa in the Formula Renault 2.0 NEC in 2009, and to Felipe Nasr in the British Formula Three Championship in 2011. He progressed to Formula Renault 3.5 with Carlin in 2012 and won the championship in 2013 with DAMS, finishing sixty points clear of runner-up Stoffel Vandoorne.
A member of the McLaren Young Driver Programme from 2010, Magnussen signed with McLaren for 2014 alongside Jenson Button. On his Formula One debut at the Australian Grand Prix, he qualified fourth and finished second — later promoted from third after Daniel Ricciardo's disqualification — becoming the first rookie to finish second on debut since Jacques Villeneuve at the 1996 Australian Grand Prix and the first Danish driver to reach a podium. He scored points in eleven further races that season. Fernando Alonso replaced him for 2015; Magnussen remained as test and reserve driver, substituting for Alonso at the season opener in Australia before being released at year's end.
Magnussen joined the relaunched Renault team for 2016 alongside rookie Jolyon Palmer. His season was beset by incidents — punctures, crashes, and collisions — but he rescued seventh place at the Russian Grand Prix, Renault's best finish of the year. He scored seven of the team's eight points that season.
Magnussen signed with Haas for 2017, partnering Romain Grosjean. He recorded seventh place in Azerbaijan, his season-best, during a year marked by reliability issues and racing incidents. A notable off-track moment came in Hungary when Nico Hülkenberg — whom Magnussen had forced off the track — confronted him in the paddock and branded him "the most unsporting driver on the grid", to which Magnussen's retort attracted widespread attention.
The 2018 season brought career-best results: the upgraded Haas VF-18 proved fast in qualifying and Magnussen scored consistently, finishing ninth in the championship with 56 points — nineteen clear of teammate Grosjean. Both Haas cars retired from Australia after incorrect pit-stop wheel attachments, a recurring theme for the team. He produced his first fastest lap in Singapore that year.
The 2019 and 2020 campaigns were difficult. The VF-19 qualified well but degraded badly in races; the 2020 car was outright uncompetitive. Both Magnussen and Grosjean departed Haas at the end of 2020.
In 2021 Magnussen moved to the IMSA WeatherTech Championship with Chip Ganassi Racing's No. 01 DPi entry alongside Renger van der Zande. He won his first race at the Detroit Grand Prix on 12 June and ended the season seventh in points with four straight podium finishes. He also drove for High Class Racing at the 24 Hours of Le Mans alongside his father Jan and Anders Fjordbach. A one-off IndyCar appearance at Road America with Arrow McLaren SP ended in mechanical retirement.
Following the Russian invasion of Ukraine, Haas terminated Nikita Mazepin's contract and brought Magnussen back for 2022. His return was spectacular: at the Bahrain opener he started seventh and finished fifth, Haas's first top-five since 2019. At the São Paulo Grand Prix, Magnussen took his and Haas's first-ever Formula One pole position after a red flag during a deteriorating wet qualifying session — becoming only the second driver in F1 history to take pole for a non-Ferrari team using a Ferrari engine, fourteen years after Sebastian Vettel's Toro Rosso pole in 2008. He retired from the Grand Prix itself on the opening lap.
Magnussen partnered Nico Hülkenberg in 2023 and 2024 but struggled with a car that did not suit his driving style, particularly in tyre management. In 2024 he announced his departure mid-season; he missed the Azerbaijan Grand Prix after accumulating enough super-licence penalty points for a race ban — the first such ban since former teammate Romain Grosjean in 2012. He was also absent from the São Paulo race weekend due to illness, replaced both times by Oliver Bearman.
In late 2024, BMW M Motorsport announced Magnussen as a factory driver for their LMDh programme. His first race for BMW in the IMSA WeatherTech Championship was the 2025 Rolex 24 at Daytona, where the BMW M Team RLL entry finished fourth.