Thilakan started his career in acting as a theatre artist. He ventured into full-time acting in theatre after leaving intermediate college mid-way in the year 1956. It was during his years in theatre that he honed his skills in acting. During this period he and a few friends formed a drama troupe called the Mundakayam Nataka Samithy. He worked with Kerala People’s Arts Club till 1966, followed by stints in Kalidasa Kala Kendra, Changanacherry Geetha, and P. J. Antony’s troupe. He also performed in several radio plays presented by All India Radio. Thilakan is now in the fiftieth year of his acting career.

In spite of his long association with theatre, Thilakan became a household name only after his foray into Malayalam cinema. 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. He was strongly favored to get another National Film Award for Best Actor for his performance in the movie Perumthachan. As noted in the rediff interview, the award was steered away from him to Amitabh Bachchan due to strong lobbying, as Amitabh announced his retirement that year. 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.

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, with Jayaram in Veendum Chila Veettu Karyangal and Sandesam, with Dileep in Meenathil Thaalikettu, with Kunchacko Boban in Aniyathi Pravu and with Prithviraj in Sathyam. 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 has played lead roles in many movies including Ekantham, Perumthachan, Santhanagopalam, Kaattukuthira, My Dear Muthachan, Mukhamudra (double role), etc.

Thilakan fell ill at the beginning of the 2000s and was hospitalized for a long time. After recovering he slowly returned to acting. He subsequently made a series of statements in interviews criticizing prominent figures of the Malayalam film industry.