Although born in Phoenix, Michaels grew up in San Antonio, Texas. Trained by Jose Lothario, he debuted in 1985 in Texas. He made his national debut in 1986 in the now defunct American Wrestling Association teaming with Marty Jannetty forming a team called the Midnight Rockers.

In 1988, Michaels and Jannetty joined the World Wrestling Federation (now the WWE), still as a team but called simply "The Rockers." Michaels and Jannetty split in late 1991, with Shawn going on to wrestle solo, winning the WWF Intercontinental Title belt in 1992.

He later became the perceived leader of a backstage group known as the Clique, which obtained sufficient clout with WWF owner Vince McMahon to become the dominant wrestling figures in the promotion for several years in the mid-1990s. Shawn won his first WWF World title in April 1996 at WrestleMania XII, defeating Bret Hart.

In November 1997 Michaels beat Hart in a very controversial match in Montreal. Hart, who then held the WWF title, had reportedly been assured that he would win the match. However, McMahon, concerned that Hart was leaving the WWF and taking the belt with him, arranged for the bell to be rung too soon, giving Michaels the match and the title. Several years later, Michaels admitted he knew about McMahon's plan beforehand.

In 1998 a back injury forced Michaels into retirement after losing the WWF World Heavyweight Title to Stone Cold Steve Austin. Michaels would return on occasion to the WWF, but not as a wrestler.