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Michael Nyqvist's first big breakthrough came in 2000 with the film Together directed by Lukas Moodysson. The movie was set in the 1970's and followed the antics of life in a suburban commune in Stockholm. The movie reached great international success and earned Nyqvist his first Guldbagge Best Actor nomination for his role as a misguided husband with anger issues. He later played the leading man in the Swedish romantic comedy, The Guy in the Grave Next Door directed by Kjell Sundvall. The film is based on the novel of the same name written by Catherine Mazetti. The film explored the difficulties that arise between a farmer living in the country and a city girl librarian highlighting working class and upper-middle class differences. Nyqvist won a Guldbagge Best Actor award for his role as the farmer, Benny.

In 2004, he played the lead role as Daniel Darius, a conductor and musician, in the Academy Award nominated Best Foreign Film As It Is in Heaven, directed by Kay Pollak. As It Is in Heaven is one of the most watched Swedish films and the role highlighted Nyqvist's ability to display tenderness and vulnerability at the same time as rage and angst.

In 2006, he starred in Suddenly directed by Johan Brisinger. In Suddenly, Nyqvist plays Lasse - a man who must come to terms with the sudden loss of his wife and son. In 2007, Nyqvist portrayed Swedish ambassador Harald Edelstam, in The Black Pimpernel, a hero who saved several lives from execution in Chile during and after the military coupe in September 1973.

Michael has garnered recent international attention starring as Mikael Blomkvist in The Girl With the Dragon Tattoo (Swedish title: Mon som hatar kvinnor), The Girl Who Played With Fire (Swedish title: Flickan som lekte med elden) and The Girl Who Kicked the Hornets' Nest (Swedish title: Luftslottet som sprongdes) of Stieg Larsson's Millennium Trilogy. Although Nyqvist always was high on the list of potential actors to portray Blomkvist, it was his charisma that got him the role. Director of The Girl With the Dragon Tattoo, Neils Arden Oplev found what he was looking for in Nyqvist - someone with the right looks, charm and likeability.

Michael can be next seen in Abduction directed by John Singleton, an adaptation of Henning Mankell's novel The Man from Beijing and Mission: Impossible - Ghost Protocol. He is also part of the permanent ensemble at the Royal Dramatic Theatre in Stockholm, Sweden.