He made his acting debut with the film Tere Mere Sapne alongside Chandrachur Singh in 1996 which failed at the box-office. He then worked on a handful of films over the years without any major success. He did not break into the limelight, however, until his portrayal of "Circuit" in the popular 2003 Bollywood film Munna Bhai M.B.B.S. with Sanjay Dutt.

He won a Zee Cine Award Best Actor in a Comic Role for his performance in Munnabhai M.B.B.S.

To prove his worth as an actor he acted in the critically acclaimed Waisa Bhi Hota Hai Part 2, where his acting was also greatly acclaimed.After that he worked in a string of successful films, such as, Hulchul (2004), Salaam Namaste (2005), Maine Pyaar Kyun Kiya (2005) and Golmaal (2006). He reprised his role of Circuit in Lage Raho Munna Bhai (2006) which has become a big smash hit, and has been popularly labeled a 'modern day classic'.

Arshad has done a number of projects on the small screen. He hosted a popular award show Sabsey Favourite Kaun on Star Gold for three years. He is currently hosting Filmy Stock Exchange on Sahara one's Filmy channel. He did a guest appearance in Star One's popular teen show Remix, where he appeared as himself to promote his movie Kuch Meetha Ho Jaaye.He is also hosting a show on Sony TV, Bigg Boss - Big Brother India. Big Boss has become a huge hit in India making Arshad a huge star.

Arshad married Maria Goretti on February 14, 1999. They have a son named Zeke Warsi, born on August 10, 2004. Both Maria and Zeke had a blink and miss appearance in Salaam Namaste, starring Warsi as well as Saif Ali Khan and Preity Zinta. The film was a hit.