Thilakan started his career in acting as a theatre artiste. He ventured into full-time acting in theatre after leaving intermediate college mid-way in 1956. It was during his years in theatre that he honed his skills in acting. 

He began his career in cinema with a minor role in the film Ulkadal (1979). His first role as a lead character was as Kallu Varkey, a drunkard in Kolangal (1981). Thilakan established himself as an actor after he got his first State Award in 1981 for his role in Yavanika.

 In 1988, he received the National Film Award for Best Supporting Actor for his performance in Rithubhedam. Again in 1994, and in 1998, he won State awards for Santhanagopalam and Gamanam. 

The film Kireedam was a milestone in his career. In this film he portrayed a helpless policeman silently  watching the fate of his son, played by Mohanlal, who was made into a rowdy by society. Some of Thilakan''s other notable films are Sphadikam, Moonnam Pakkam, Namukku Parkkan Munthiri Thoppukal, Mookkilla Rajyathu, Chenkol, Randam Bhavam, Kaattu Kuthira and Yavanika.

 He has also acted in other South Indian  languages, such as Tamil. Thilakan has portrayed a range of characters. The most popular roles have been with Mohanlal when they portrayed a father-son duo.These included Kireedam, Sphadikam, Narasimham, Evidam Swargamanu, Pavithram and Chenkol.

 He has also played father roles to other popular actors, including with Mammootty in Sangham, The Truth, No. 1 Snehatheeram Banglore North and Pallavur Devanarayanan. 

He has also played many negative roles. His roles of underworld don in Randam Bhavam, Karma and Kaalal Pada were memorable. He has played comical roles in films like Nadodikkattu and Pattanapravesham (as a coward underworld don), Mookkilla Rajyathu (as a breakout from a  mental hospital), Kuttettan (as a  womanizer) and Naaduvazhikal (as a good-for-nothing, vain person). 

He became a controversial figure after openly criticising prominent figures of the Malayalam film industry. 

Known for his excellence in character roles, Thilakan was awarded the Padma Shri in 2009 for his contributions towards the film industry. 

The renowned actor died following heart attack on September 24, 2012