Shaji is married to Anasuya Warrier on 1 January 1975, daughter of P. K. R. Warrier, who was his neighbour in Trivandrum for quite some time. After a brief stint in the south Indian city of Madras, he returned to Thiruvananthapuram in 1976 where he got an appointment as film officer in the newly formed state Film Development Corporation. They have 2 sons ANil & Appu. His association with the legendary Malayalam film maker G. Aravindan began at this time. Then he continued working with notable directors like G. Aravindan, K. G. George and M. T. Vasudevan Nair as a cinematographer.
Shaji made his directorial debut with the Malayalam film Piravi ("The Birth", 1988), which won him the prestigious Caméra d'Or - Mention d'honneur at the 1989 Cannes Film Festival. While Piravi was about the grief of a father who loses his son, Shaji's second film, Swaham (1994) continued with the theme of grief. Swaham was selected to the compete at the 1994 Cannes Film Festival.Vaanaprastham ("The Final Dance", 1999) dealt with the identity crisis faced by an actor. Mohanlal played the lead role in this film. He directed the film Nishad, made in Hindi, which was completed in May 2002, and premiered in the Fukuoka International Film Festival held in September 2002 in Japan. His latest film is titled Kutty Srank with Mammootty playing the lead role. The film was released theatrically in Kerala on July 2010. His latest project Gaadha was announced in September 2012, and is expected to commence shooting by November 2014. Music will be composed by the Polish composer Zbigniew Preisner. His new film SWAPAANAM with Jayaram and Kadambari in lead roles has premiered at Dubai International Film Festival on 08 Dec 2013, a rare recognition for Malayalam Cinema as the World premier screening outside India.
He has also made around a dozen short films and documentaries. Besides making films, Shaji Karun has been active as a juror at many international film festivals and an active participant in governmental and academic arenas. He was the Premiere Chairman of the Kerala State Chalachitra Academy, the first academy for film and TV in India and was also the Executive Chairman of International Film Festival of Kerala from 1998 to 2001.