Born in St. Louis, Missouri, to a working-class Greek American family, he first became hooked on acting when he was four years old and his mother took him to a local community theater. He studied theatrical arts at Saint Louis University and earned a master's degree in theatre from Indiana University. From 1971 to 1986, he toured with Peter Brook's international theatre company, performing improvisational and prepared theater pieces on stages ranging from Lincoln Center to barrios in Venezuela. In 1981-82, he appeared on the CBS daytime drama (soap opera) Guiding Light as Lucien Goff, a mysterious one-eyed man (he wore a patch over one of his eyes), who tried to kill the character Mike Bauer twice.
Katsulas moved to Los Angeles, California, in 1986. His film roles include appearances in The Sicilian, Next of Kin, Someone to Watch Over Me, Sunset, Hot Shots! Part Deux, The Fugitive, and Executive Decision.
In early 2005, Katsulas was diagnosed with incurable lung cancer. Shortly before his death, he invited Straczynski, Peter Jurasik, and Douglas Netter to his house for one last dinner, during which he persuaded Straczynski to tell him all the secrets about the making of Babylon 5 that had been kept from the public, saying, "Tell me all the dirt. Tell me all the shit that went down behind the scenes that we never knew about. Who am I going to tell?"
Katsulas died on February 13, 2006, at the age of 59. He was survived by his wife and two children.