Born in Wigan, Greater Manchester, Farrell first played rugby league at age 10 at a summer camp run by Graeme West, Wigan's captain at the time. After developing with local club Orrell St James, he made his first team debut for his home town club Wigan at the age of 16, in a 1991 Regal Trophy match against Keighley. Also that year his son Owen Farrell, who would also go on to become a professional rugby player, was born. He went on to become the youngest player to win a Challenge Cup final in 1993 when at 17 years and 11 months he came on as a substitute against Widnes. Farrell then became a full international by 18, making his debut against New Zealand later in 1993. After the 1993–94 Rugby Football League season, during which Farrell was a try-scorer in Wigan's Challenge Cup final victory, Farrell travelled with his club to Brisbane, playing at second-row forward in their 1994 World Club Challenge victory over Australian premiers, the Brisbane Broncos. He rates this as one of his greatest achievements in rugby league. Farrell was selected to play for Great Britain against Australia in all three AshesTests of the 1994 Kangaroo tour. The following year he played from the bench for Wigan in the 1995 Challenge Cup final victory over Leeds. At the end of the season Farrell played for England in the 1995 World Cup final at loose forward but Australia won the match and retained the Cup. Also that year, Farrell married the older sister of future Great Britain international and Wigan captain Sean O’Loughlin.
On 24 March 2005, Farrell announced his retirement from rugby league to take on a new challenge with Saracens and the Rugby Football Union. A series of injuries and accidents (including a car crash) meant that his debut in the 15-man code was delayed until 2006. He finally made a try scoring debut, for Saracens reserves, on 11 September 2006. He then made his first team debut against Newcastle Falcons on 17 September 2006 as a replacement. On both occasions, he played as blind-side flanker. A row then broke out about his best position: the England management suggested he should be playing in the centre whilst Saracens continued to play him as a flanker. However, he went on to play primarily at centre for the Saracens first team and again when selected to play for a World XV against South Africa. He was selected as a part of the England Elite squad by new coach Brian Ashton, for the 2007 Six Nations. He was seen by some to be the main contender for the starting inside centre position, after England's problems in that position during the 2006 Autumn Internationals.
Farrell made his England debut at Twickenham after he was named at inside centre in the first Six Nations game against Scotland. The 2007 World Cup saw Farrell starting at inside centre against South Africa, in England's chastening group stage defeat. He was then brought on as a replacement against Tonga, and scored his first England try. However, after being picked for the quarter-final decider against Australia, he had to withdraw with a calf injury. Unfortunately, he never produced the performances in England colours which many, notably Robinson, had hoped for and ultimately won only 8 caps. In January 2008, Farrell was joined at Saracens by his 16-year-old son Owen Farrell, who signed a three-year academy deal with the club. In August 2008, Farrell was named co-captain for the 2008/09 season along with Steve Borthwick. There were rumours of Farrell returning to Rugby League to rejoin Wigan Warriors after it emerged that Saracens head coach Eddie Jones had become unhappy with the direction the club was heading. It was rumoured that Jones and Farrell could be moving up north with the Warriors becoming increasingly inpatient with out of favour Brian Noble especially after Warriors poor start the season, however this proved to be unfounded with the Warriors instead hiring Melbourne Storm assistant coach Michael Maguire. In April 2009, Farrell announced his retirement and said he was taking up a coaching role with Saracens at the end of the season.
Farrell was promoted to Saracens first team coach at the end of 2010 after impressing as skills coach. The RFU announced on 8 December 2011 that Farrell, along with Graham Rowntree was to join the national coaching team, led by Stuart Lancaster, for the 2012 Six Nations championship. After a successful campaign, Farrell was given the chance to become a permanent part of the England set-up, but decided to return to Saracens. However, Farrell soon left the London club and the RFU announced on 28 June 2012 that he would join the England coaching team on a three and a half-year contract.