Castle was born Nicholas Charles Castle, Jr. in Los Angeles, California, the son of Millie (née Granata) and Nicholas Charles Castle, Sr. (1910-1968), who was an actor and top choreographer for motion pictures, television, and the stage, and was nominated for an Emmy. As a child, Nick Castle often appeared as an extra or in bit roles in his father's films. He studied film at USC, where he served as cinematographer for the Academy Award-winning live action short film The Resurrection of Broncho Billy.

Castle's film credits include Major Payne, Dennis the Menace, The Last Starfighter, and Connors' War as a director, Escape from New York and Hook as a screenwriter, and Tap as both. He played Michael Myers in the 1978 horror classic Halloween, directed by former USC classmate John Carpenter and set the standard for the character.

For playing the role of Michael Myers in the movie, Halloween, Castle was paid $25 a day for the scenes of Michael Myers.

Castle's most recent project is the screenplay for August Rush, a musical-drama directed by Kirsten Sheridan and starring Freddie Highmore, Jonathan Rhys-Meyers, Robin Williams, and Keri Russell, released in 2007.

Castle had won an Saturn Award for Best Writing for The Boy Who Could Fly, and a list of other awards Nick Castle has won and nominated: Silver Raven (for Delivering Milo), Grand Prize (for The Last Starfighter and a Bronze Gryphon also Gold Medal of the Regional Council.