In 1986 he graduated cum laude from Yale University with a Bachelor of Arts degree in fine art.

In 1990 he founded in New York City a theater company, Hard Place Theater, in which he created and directed several "non-fiction" theater pieces using only found materials such as government documents, transcripts and cultural records. One project titled "United Airline," included the transcript of the air-to-ground conversations during a plane crash, interspersed with quotes about flying and falling.

During the 1990s in New York City he also worked as a lighting designer for numerous experimental theater and dance companies, including the Wooster Group, Elevator Repair Service and Dana Reitz.

In the early 1990s, Shirky was vice-president of the New York chapter of the Electronic Frontier Foundation, and wrote technology guides for Ziff Davis. He appeared as an expert witness on Internet culture in Shea v. Reno, a case cited in the U. S. Supreme Court's decision to strike down the Communications Decency Act in 1996.

Shirky was the original Professor of New Media in the Media Studies department at Hunter College, where he created the department's first undergraduate and graduate offerings in new media, and helped design the current MFA in Integrated Media Arts program.

In the fall of 2010, Shirky will serve as the Visiting Morrow Lecturer at Harvard Kennedy School instructing a course titled: New Media and Public Action

In his book "Here Comes Everybody" Shirky explains how he has long spoken in favor of crowdsourcing and collaborative efforts online. He uses the phrase "the Internet runs on love" to describe the nature of such collaborations. In the book, he discusses the ways in which the action of a group adds up to something more than just aggregated individual action. He points to four key steps. The first is sharing, a sort of “me-first collaboration” in which the social effects are aggregated after the fact; people share links, URL, tags, and eventually come together around a type. This type of sharing is a reverse of the so-called old order of sharing, where participants congregate first and then share (examples include Flickr, and Delicious). The second is conversation, that is, the synchronization of people with each other and the coming together to learn more about something and to get better at it. The third is collaboration, in which a group forms under the purpose of some common effort. It requires a division of labor, and teamwork. It can often be characterized by people wanting to fix a market failure, and is motivated by increasing accessibility. The fourth and final step is collective action, which Shirky says is “mainly still in the future.” The key point about collective action is that the fate of the group as a whole becomes important. In a presentation called "Gin, Television, and Social Surplus", Shirky popularized the concept of cognitive surplus, the time freed from watching television which can be enormously productive when applied to other social endeavors. He also notes that we are experiencing an era where people like to produce and share just as much, if not more than they like to consume. Since technology has made the producing and sharing possible, he argues that we will see a new era of participation that will lead to big change.

Shirky has also written about "algorithmic authority," which describes the process through which unverified information is vetted for its trustworthiness through multiple sources.

The Shirky Principle

In April, 2010, Kevin Kelly cited the phrase "Institutions will try to preserve the problem to which they are the solution," and called it the "Shirky Principle", as the phrasing reminded him of the clarity of the Peter Principle.