Carroll produced and directed numerous Broadway musicals, including eleven editions of Earl Carroll's Vanities, Earl Carroll's Sketch Book, and Murder at the Vanities, which was also made into a film starring Jack Oakie. Known as "the troubadour of the nude", Carroll was famous for his productions featuring the most lightly clad showgirls on Broadway. In 1922, he built the first Earl Carroll Theatre in New York, which was demolished and rebuilt on a grander scale in 1931. He built a second theatre on Sunset Blvd. in Hollywood, California in 1938.
In 1926, Carroll became involved in a scandal due to a party he threw in honor of Harry Kendall Thaw, the Pittsburgh-bred murderer of Stanford White 20 years earlier and a potential investor in Broadway shows. During the private party a bathtub was brought out in which there was a nude young woman bathing in illegal liquor. One of the guests at the party was Philip Payne, editor of the New York Mirror. Although Carroll expected his guests would be circumspect about what happened at the party, Payne published a report. This was noted by federal authorities, and they subpoenaed Carroll to appear (with others) before a grand jury. The authorities were apparently determined to learn the source of the illegal alcohol. Carroll denied the incident happened, but others at the party confirmed it. The federal government prosecuted Carroll for perjury, and he was convicted and sent to the Atlanta Penitentiary for six months.
Carroll wrote the scores for Broadway shows including So Long, Letty, Canary Cottage, and The Love Mill for which he also wrote the libretto. As a writer of popular songs, his credits include Isle d'Amour, So Long, Letty, Dreams of Long Ago, Give Me All of You, Just The Way You Are, and Dreaming, for which he supplied lyrics to the waltz by Archibald Joyce.